Distributing tokens as part of launching a new digital asset is fairly common. New tokens are distributed through ICOs, IEOs, and airdrops among more popular means. Over the years, other companies have found innovative ways to launch their cryptocurrencies and chains. Livepeer innovated with the Merkle Mine that allowed ETH addresses to “mine” LPTs, while more recently Edgeware launched their EDG token using a mechanism known as LockDrop.
Now there is a new distribution method that has been designed by a company known as NuCypher, a method that is very intriguing. It has not been launched yet, but has already been tested through NuCypher’s incentivized testnet.
NuCypher is building cryptographic infrastructure for privacy-preserving applications, particularly DApps.
NuCypher’s ‘WorkLock’ distribution model was born out of a desire to distribute digital tokens in a way that incentivizes people to get involved with the new protocol. This makes sense. Token distribution tends to occur for one of two purposes: to raise money so that the asset in question can be further developed or to encourage developers to contribute their skill, knowledge or work.
The latter reason is responsible for driving the WorkLock proposal. NuCypher wants to get people involved in actually building its platform from the ground up. They believe the best way to accomplish this is to encourage those wanting to get involved to put some skin in the game.
ICOs and Airdrops vs WorkLock, LockDrop etc.
ICOs are good tools for raising funds, but they are highly regulated in most countries. Furthermore, ICOs tend to attract investors rather than developers. If you are looking to get people to help with the actual work of developing a new chain, the ICO is not the best way to go.
Airdrop distribution relies on giving away tokens for free. But as a way to get people involved in the actual development, airdrops offer very little value. Few people will invest their time and effort into something they get for free.
WorkLock Definition
The WorkLock distribution method is completely different. NuCypher’s WorkLock will require interested parties to lock up ETH in a smart contract for six months in order to receive the NU digital tokens. The intended purpose of NUs is to stake them to a worker node, called Ursulas in the NuCypher world, that along with the other nodes perform encryption services on the network.
After the six-month lock-up, provided that the worker node the NUs are staked to did the required amount of work, the locked ETH and NUs will be released back.
WorkLock is an innovative way to distribute tokens and get developers involved in doing the work to move a digital asset forward. It hasn’t been tried yet, and NuCypher is going to be the first to implement it.
More information about the WorkLock is available on the NuCypher blog.