L2 platform ZKFair held a Fair Launch event for its new token, ZKF, last month. In this event, the quantity of tokens a user receives through airdrops is directly proportional to the amount of gas consumed. This article will analyze this innovative token issuance model known as “IGO.” The article is sourced from Bitrise Capital and organized by PANews.
ZKF Fair Launch
ZK-rollup technology has gained wide recognition in the Ethereum ecosystem for its significant advantages in network scalability and reducing transaction costs. This technology improves network throughput by bundling a large number of transactions and processing them off-chain, thereby reducing transaction fees for users and making blockchain technology more practical and economical.
Against this backdrop, ZKFair, the first EVM-compatible Layer 2 (L2) platform developed based on Polygon’s CDK and Celestia database, launched a 48-hour Fair Launch event on Christmas Eve 2023. The purpose of this event was to distribute its new token, ZKF.
ZKFair plans to issue a total of 10 billion ZKF tokens. Participants qualify for airdrops by conducting transfer operations on the ZKF chain and consuming gas. This mechanism ensures the fairness of token distribution as the quantity of tokens received is proportional to the amount of gas consumed.
Additionally, 25% of the ZKF tokens will be airdropped to community contributors after the event, while the remaining 75% will be distributed fairly among participants in the Fair Launch.
Traditional token issuance methods usually involve projects directly issuing tokens to investors through private sales, pre-mining, or public sales. This method may lack clear regulations and processes and may not involve exchanges or other third-party platforms. It may include early private investment rounds, token allocations to early supporters, development teams, or advisory consultants. This issuance method may have lower transparency and security as it is entirely controlled by the project.
ICO is an early token sale method similar to the traditional initial public offering (IPO) in finance. In an ICO, projects sell newly created tokens to the public, usually to raise funds for project development and operation. Investors purchase tokens with the expectation that they will appreciate in the market. ICOs led to the bull market from 2017 to 2018 but gained a damaged reputation due to regulatory issues and fraudulent activities by some projects, and are now rarely used.
IEO is a token issuance method conducted through cryptocurrency exchanges. In an IEO, exchanges conduct due diligence on token projects and provide a platform for token sales. Investors need to register an account on the exchange and purchase the new tokens through the platform. IEOs are generally considered safer than ICOs as the involvement of exchanges provides investors with a certain level of trust and verification.
IDO is conducted on decentralized exchanges (DEX) without relying on traditional centralized exchanges. Tokens are issued and sold directly on DEX through smart contracts. IDO’s advantages include greater transparency and lower participation thresholds, making it a fairer and more characteristic issuance method in the Web3 industry.
IDO helps projects quickly acquire liquidity as tokens can be traded on DEX immediately upon issuance. However, in practical applications, IDO is mostly used as a supplementary issuance method, with a relatively small proportion in the total issuance volume.
ZKFair’s Fair Launch can be considered a revolution in token distribution. Its form does not conform to any previous models. Participants receive token airdrops in proportion to their on-chain transfer behavior and the gas burned. The project receives the gas paid by participants as revenue for this token issuance.
This Fair Launch of ZKFair demonstrates its fairness in the token issuance mechanism. The key is that the mechanism does not restrict participants’ identities:
Regardless of whether they are large institutions or individual retail investors, as long as they perform corresponding operations on the ZKFair chain during the event, they automatically qualify for ZKF airdrops.
In addition, there is no whitelist or pre-sale phase in the ZKF issuance process, ensuring equal participation opportunities. Out of the total of 10 billion tokens, 2.5 billion tokens will be allocated to community contributors, while the remaining 7.5 billion tokens will be distributed fairly through airdrops to all event participants.
The entire issuance event is divided into four stages, each lasting 12 hours. The project sets a total gas consumption limit of 3 million USDC and an average allocation of 1.875 billion ZKF, worth 750,000 USDC, in each stage.
In each stage, if the gas consumption exceeds the predetermined quota of 750,000 USDC, the project calculates the number of airdropped tokens a user should receive based on the proportion of their gas consumption within that stage’s total gas consumption. For the excess gas consumed, the project promises to refund it proportionally after the event.
For example, if a total of 1 million USDC of gas is consumed in the first stage, User A, who consumed 10,000 USDC of gas, will receive approximately 18.75 million ZKF tokens through airdrops and will also receive a refund of 2,500 USDC.
This mechanism ensures that ordinary participants do not lose the opportunity to participate due to intense competition from large capital participants. Additionally, by refunding the excess gas cost proportionally, this mechanism solves the problem of unnecessary gas burning costs in previous similar airdrop events. Such rule design not only reflects careful consideration in fair issuance but also demonstrates ZKFair’s commitment to fairness in action.
In the Initial Gas Offering (IGO) framework, the roles and motivations of participants are significantly different from traditional token issuance models. This new issuance mechanism is not based on direct financial investment but active participation and contribution to the ecosystem.
In this framework, participants qualify for airdrops by interacting and conducting transaction activities on the ZKFair chain, including using various applications on the chain and consuming gas. This participation method is closer to consumer behavior, where users actively engage in the ecosystem by using services and applications, and in return, they receive token airdrops as additional rewards.
This model can be compared to traditional business promotional activities. For example, in anniversary events at shopping malls, consumers receive additional gifts when their consumption in the mall reaches a certain amount. Here, the mall (i.e., the ZKFair ecosystem) provides a variety of goods and services for consumers to choose from, and the gifts are equivalent to the token airdrops users receive through participating in ecosystem activities.
This model not only encourages users to engage more deeply in the ecosystem but also may to some extent reduce legal risks associated with traditional token issuance because it emphasizes participation and consumption rather than direct financial investment.
Furthermore, the design of the IGO model also reflects the importance given to user participation in the blockchain technology and cryptocurrency field, emphasizing the establishment of a more inclusive and dynamic ecosystem. This model encourages users to experience and support blockchain projects through actual usage of applications and services, thereby promoting technology adoption and innovation.
In the long run, the IGO model can not only bring a broader user base to projects but also contribute to the formation of a more active and healthy blockchain ecosystem.
The ZKFair Fair Launch and the IGO model are both manifestations of the high value placed on innovation and fairness in the current cryptocurrency market. They not only provide new opportunities for participants but also drive the healthy development of the entire blockchain ecosystem.
With the application and development of these models, we have reason to believe that they will continue to have a profound impact on the cryptocurrency field, stimulating market vitality and promoting greater attention and activity in public chains. Just as the ZKFair project played a crucial role in the current bull market, its success lies not only in effectively solving the asset issuance problem in the BTC ecosystem but also in adopting the “fair mint” principle as a key narrative for project success. The core of this principle is to establish a fair and open market environment driven by a wide range of retail investors, ensuring that everyone has an opportunity to participate. The openness and inclusiveness of this market environment are among the main reasons for the high recognition given to the ZKFair project by the market.
Based on this, the emergence of the Initial Gas Offering (IGO) model can be seen as a successful reference to the core concept of the ZKFair project. The IGO model emphasizes openness in the early stages of the project, allowing broader participation from ordinary investors. This not only enhances the project’s attractiveness and visibility but also effectively meets the financing needs of the project and brings substantial rewards to actively participating users. The design of IGO balances flexibility and universality, making it widely applicable to various Layer 1 (L1) and Layer 2 (L2) blockchain networks.
The ZKFair project and the IGO model both embody the current cryptocurrency market’s high regard for innovation and fairness. They not only provide new opportunities for participants but also drive the healthy development of the entire blockchain ecosystem.
With the application and development of these models, we have reason to believe that they will continue to have a profound impact on the cryptocurrency field, stimulating market vitality and promoting new innovations and trends, just as the ZKFair project brought significant breakthroughs to the BTC ecosystem, and the IGO model is expected to trigger a series of new innovations and active trends in the cryptocurrency field.