Some of the community members said that the 2nd Plasm lockdrop would dilute the value of the early lockdropers. Actually, is it?
TL;DR
I think no because the valuation of PLM should be increased if more people join the lockdrop though the share is reduced. (Good thing from the community perspective)
The basic mechanism of lockdrop
Lockdrop is the fairest way to distribute tokens. (As long as we know) It is a low-risk economic incentivization mechanism, where it uses opportunity costs rather than legal tender (or assets) as collateral. Plasm Network uses this mechanism to issue tokens that work as the main incentivization method for network maintainers and dApp developers. The concept of a lockdrop was first conceived by Edgeware, and the one used for Plasm Network is an expansion of its original mechanism. We added an introducer mechanism and multi-lockdrops on the original mechanism. The native token used in the Plasm Network is written PLM and pronounced as “plum”.
Thought
To make it simple, let’s assume the following situation.
- There are 3 participants (Alice, Bob, and Charlie)
- Alice locks 5 ETH for 30 days. Bob locks 7 ETH for 40 days. Charlie locks 8 ETH for 50days.
- Total Value Locked for Plasm is 20 ETH.
- Alice is the 1st person who joined the lockdrop. Bob is the 2nd and Charlie is the 3rd.
When Alice joined the lockdrop, she received 100 PLM. Since Alice is the only one participant, she has 100% PLM. The opportunity cost is α (5 ETH×30days opportunity cost). So the valuation of PLM should be around α. Then, Bob joined the lockdrop. He locked 7 ETH for 40 days. The TVL is 12 ETH and he should receive 184 PLM (7ETH×40days bonus rate worth PLM). At this moment, Alice has 35% (100/(184+100)) of the total supply now. But the total opportunity cost is (α+β) and the valuation should be around (α+β) now. The important point is that the shares of Alice were reduced but the total valuation was increased since the valuation should be determined by α and β now. Lastly, Charlie joined the lockdrop. In the same way, he received 266 PLM.
Does Alice dilute her value? No. Because…
Alice’s value at the first point: α
Alice’s value after Bob joined the lockdrop: (α+β)×35%
Alice’s value after Charlie joined the lockdrop: (α+β+θ)×18%
α= (α+β)×35%=(α+β+θ)×18%
Conclusion
Regardless of the participants and locked ETH, the value of Alice’s PLM is the same. From the community perspective, the more people join the lockdrop, the more valuation PLM has and the more decentralized PLM is. As we observed, Alice’s total share is reduced but this is a good thing from the community perspective.
