Research Technology
January 12, 2024

The birth of IGO at ZKFair: A Revolution in Fair Launch

The birth of IGO at ZKFair: A Revolution in Fair Launch

ZKF Fair Launch

In the current Ethereum ecosystem, zk-rollup technology is widely recognized for its significant advantages in network scalability and reducing transaction costs. This technology, by bundling a large number of transactions and processing them off-chain, greatly enhances network throughput while reducing transaction fees for users, making blockchain technology more practical and economical.

Against this backdrop, the first EVM-compatible Layer 2 (L2) platform based on Polygon’s CDK and the Celestia database, ZKFair, launched a 48-hour Fair Launch event on Christmas Eve 2023. The purpose of this event was to issue its new token, ZKF. ZKFair plans to issue a total of 10 billion ZKF tokens. Participants can qualify for airdrops by transferring on the ZKF chain and consuming gas. This mechanism ensures the fairness of token distribution, as the number of tokens received is proportional to the amount of gas spent. Furthermore, 25% of the ZKF tokens will be airdropped to community members who have contributed, while the remaining 75% will be fairly distributed among the participants of this Fair Launch event.。

Token Distribution

  • Conventional Token Issuance

Conventional token issuance typically encompasses methodologies such as private sales, pre-mining, or public offerings directly executed by project entities to distribute tokens to investors. This approach may be bereft of explicit regulatory frameworks or processes, and often operates without the involvement of exchanges or other third-party platforms. It might encompass early-stage private investment rounds, distribution of tokens to initial backers, development teams, or advisory consultants. The transparency and security associated with this mode of issuance can be comparatively lower, as it is predominantly under the purview and control of the project initiators.

  • Initial Coin Offering (ICO)

An ICO represents an early-stage token sale mechanism analogous to the Initial Public Offering (IPO) in conventional finance. Within an ICO, project initiators engage in the sale of newly minted tokens to the public, predominantly as a fundraising venture for project development and operational expenses. The intent behind investors’ acquisition of these tokens is often anchored in the anticipation of future market value appreciation. ICOs catalyzed the bullish market trend between 2017 and 2018, but their reputation was subsequently marred by regulatory complexities and fraudulent activities by certain project entities, leading to a decline in their usage.

  • Initial Exchange Offering (IEO)

An IEO is a token issuance format facilitated through cryptocurrency exchanges. In this framework, exchanges undertake due diligence for token projects and provide a platform for token sales. Investors are required to register accounts on these exchanges to purchase new tokens. IEOs are often perceived as more secure compared to ICOs, with the involvement of exchanges providing a layer of trust and validation for investors.

  • Initial DEX Offering (IDO)

The IDO takes place on decentralized exchanges (DEXs), eschewing reliance on traditional centralized exchanges. Instead, token issuance and sales are conducted directly via smart contracts on DEXs. The IDO model is characterized by enhanced transparency and lower barriers to entry, positioning it as a more equitable and Web3-centric approach to token distribution. IDOs facilitate immediate liquidity for project entities, as tokens become tradeable on DEXs instantly upon release. Nevertheless, in practical application, IDOs frequently serve as a supplementary issuance strategy and do not typically represent a substantial portion of total issuance volume.

IGO (Initial Gas Offering)

This latest Fair Launch by ZKFair could be considered a revolution in token distribution. Its format does not conform to any traditional models. Participants receive token airdrops proportionate to the gas burnt through their on-chain transfer actions; the issuer, in turn, counts the gas paid by participants as revenue from this token issuance. This represents innovation both in the rules of the airdrop and the fundraising format. After internal discussions, Bitrise Capital suggests that this new form of token issuance could be termed an Initial Gas Offering (IGO), with the primary characteristics of IGO summarized as follows:

  • Issuance Standard

The Fair Launch of ZKFair demonstrates fairness in its token issuance mechanism. The crux lies in the non-discriminatory nature of the mechanism: irrespective of whether participants are large institutions or individual investors, as long as they perform corresponding operations on the ZKFair chain during the event, they automatically qualify for the ZKF airdrop. Moreover, the issuance process for ZKF does not establish a whitelist or pre-sale phase, ensuring equal participation opportunities. Of the total 10 billion tokens, aside from the 2.5 billion allocated to community contributors, the remaining 7.5 billion are fairly distributed to all participants via airdrop. The entire issuance event is divided into four stages, each lasting 12 hours, with the issuer setting a total gas expenditure cap of 3 million USDC and an average distribution of 1.875 billion ZKF, worth 750,000 USDC, for each stage. If gas consumption exceeds the set quota of 750,000 USDC in any stage, the issuer calculates the airdrop amount based on the participant’s proportion of gas burnt in that stage. For the excess gas spent, the issuer commits to a proportional refund post-event.

For example, if a total of 1 million USDC in gas is consumed in the first stage, participant A, who has spent 10,000 USDC on gas, would receive approximately 18.75 million ZKF in the airdrop at the end of the event, plus a 2,500 USDC refund. This mechanism ensures that average participants are not edged out by large capital players competing fiercely. At the same time, by refunding the proportion of excess gas costs, this mechanism also addresses the issue of unnecessary gas burning in such airdrop activities. The design of the rule not only reflects thoughtful consideration for fairness in sales but also demonstrates ZKFair’s commitment to equity in action.

  • Nature of the Issuance

Under the Initial Gas Offering (IGO) framework, the role and motivation of participants are distinct from traditional token issuance models. This innovative issuance mechanism is not based on direct financial investment but on active participation and contribution to the ecosystem. In this framework, participants earn airdrop eligibility through their interactions and transaction activities on the ZKFair chain, which includes using various applications on the chain and thus consuming gas. This form of participation is closer to consumer behavior, with users actively engaging by using services and applications within the ecosystem and, in return, receiving token airdrops as an additional reward.

This model can be likened to traditional promotional business activities. For instance, during a shopping mall’s anniversary celebration, consumers who spend a certain amount can receive additional gifts. Here, the mall (akin to the ZKFair ecosystem) offers an array of goods and services for consumers to choose from, with the gifts akin to token airdrops received by users for participating in ecosystem activities. This model not only encourages deeper involvement in the ecosystem but may also mitigate some of the legal risks associated with traditional token issuances, as it emphasizes participation and consumption over direct financial investment.

Furthermore, the design of the IGO model also reflects the blockchain and cryptocurrency sectors’ emphasis on user participation, underscoring the development of a more inclusive and dynamic ecosystem. This model encourages users to experience and support blockchain projects through actual use of applications and services, thus promoting the adoption and innovation of the technology. In the long run, the IGO model could not only provide projects with a broader user base but also contribute to a more active and healthy blockchain ecosystem.

Market Prosepct of IGO

Inscriptionhas played a crucial role in the current bull market, with its success stemming not just from effectively addressing asset issuance in the BTC ecosystem, but more so from its adoption of the “fair mint” principle, which has become a key narrative for its success. The essence of this principle lies in creating a fair and open market environment, driven by a wide range of retail investors, ensuring participation opportunities for everyone. The openness and inclusivity of this market environment is one of the main reasons for the high market recognition of the Inscription.

Building on this, the emergence of the Initial Gas Offering (IGO) is successful adaptation of the core concepts of the Inscription project. The IGO emphasizes openness in the early stages of the project, allowing a broader range of ordinary investors to participate. This not only enhances the project’s appeal and visibility but also effectively meets the funding needs of the project initiators while delivering substantial returns to actively participating users. The design of IGO balances flexibility and universal applicability, making it widely applicable to various Layer 1 (L1) and Layer 2 (L2) blockchain networks.

Both the Inscription and IGO reflect the current cryptocurrency market’s high regard for innovation and fairness. They offer new opportunities for participants and 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 in the cryptocurrency field, stimulating market vitality and fostering more attention and activity in public blockchains. Just as the Inscription project has brought significant breakthroughs to the BTC ecosystem, IGO is also poised to spark a series of new innovations and trends in the crypto.

Institution Comments

iZUMI Jimmy:

“ZKFair is the first Ethereum Layer 2 modular blockchain to launch with a fair IGO model. In our collaboration with ZKFair, we value the team’s long-term technical strength and, more importantly, their commitment to a community-centric, user-friendly approach with low valuation, and a transparent and fair innovative token distribution model. As a multi-chain protocol and one of ZKFair’s earliest ecosystem supporters, iZUMi looks forward to more public chain partners drawing on ZKFair’s successful experience. In 2023, iZUMi also launched the iZUMi Layer2 Fund to provide ample on-chain liquidity for our collaborating public chains.”

Bitrise Capital Kevin:

“ZKFair is a recent project that has been very successful and attracted a lot of attention. I consider its case to be of textbook caliber. I see it as an innovation and attempt to define this new token issuance method as IGO. From this project, we observe that innovation in Web3 can stem from self-driven, grassroots community initiatives. It reminds me of the term ‘self-financing.’ In ZKFair’s case, we see breakthroughs not just in business models but also a strong emphasis on de-financialization. The IGO model presents a new way of launching projects, toning down the financial aspect. It’s like shopping at a supermarket; you pay for and receive basic services, and then the supermarket rewards you with coupon. For a project’s cold start, this not only attracts users but also solves early-stage funding issues. Of course, ZKFair’s economic model still has room for improvement, but I am very optimistic about the ZKFair team’s ability to self-iterate, especially in quickly adjusting to market changes during project launch.”

Lumoz Alvaro:

“Lumoz is dedicated to developing and promoting advanced applications of blockchain technology. Our collaboration with ZKFair, a Layer-2 solution based on ZK-Rollup technology, integrates Polygon’s Common Development Kit (CDK) and Celestia’s Data Availability Layer (DA), aiming to enhance transaction processing efficiency while maintaining full compatibility with the Ethereum Virtual Machine (EVM). ZKFair has chosen the USDC stablecoin for transaction fee payments to reduce network congestion and increase transaction speed. Additionally, ZKFair’s architectural design supports a decentralized network of provers, reflecting our commitment to network autonomy and sustainable development. This decentralized structure is intended to increase network participation and achieve more transparent and fair operations through a community governance model.

The launch of Fair-L2 LaunchBase marks a significant step by Lumoz in supporting emerging ZK-L2 projects. This platform is designed to provide crucial technical support for upcoming new projects, facilitating their smooth launch. Our collaboration with Polygon also leverages the benefits of ZK-Rollup to enhance transaction efficiency and network security.”

About Bitrise Capital

Bitrise Capital is a venture capital firm specializing in the blockchain sector, primarily investing in digital currency infrastructure (infra) and mining (depin) related fields, having invested in over 100 blockchain projects to date. Bitrise Capital aims to provide secure and reliable decentralized financial services, offering asset management and connecting to various hot industry tracks such as DeFi ecology, NFT ecology, and Web3 gaming ecology. It serves over 50 institutions across multiple countries, managing an accumulated total of over $100 million in mainstream encrypted digital assets. At Bitrise Capital, clients can experience a variety of primary asset trading strategies and delve into several large DeFi projects, offering services like liquidity mining for asset appreciation, thus safeguarding the client experience in decentralized financial projects. With years of deep industry involvement, Bitrise Capital has amassed extensive practical experience in the blockchain industry and mining (depin) sector.

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