A startup offering a new twist on token airdrops has raised $2 million from a group of notable investors, CoinDesk has learned.

The investment in governance startup Commonwealth was led by 1confirmation, Canaan Partners and former Polychain partner Ryan Zurrer.

Commonwealth’s new distribution approach, called a “lockdrop,” looks to maintain the high levels of interest that airdrops inspire, while adding a hurdle meant to attract the right investors.

As Commonwealth co-founder Dillon Chen explained to CoinDesk in an email:

“Early active community members matter a lot. They create norms.”

With companies such as OpenSea, BloxRoute, Coinbase and Veil in its portfolio, 1confirmation is a familiar name in crypto, but Canaan is newer.

Founded in 1987, Canaan made successful investments in Web 2.0 breakouts including Match.com, LendingClub and Kabam. Canaan’s other blockchain-related investments include gaming startup Forte, scaling project Skale Labs, Tari and Paxos.

With Commonwealth, these investors are betting that innovations in governance will differentiate blockchain investments going forward. People care more about something if they pay for it. But if they have to pay too much, one could also exclude potentially valuable community members.

To attain that influx of community interest, but dissuade those that just want crypto candy, Commonwealth came up with a new spin on the airdrop called a “lockdrop” for its EDG token, a governance and utility token for its first product, Edgeware.

“Ethereum holders can participate in the lockdrop, they will be helping to provide security on a new network, kind of like a sidechain,” Chen told CoinDesk.

Edgeware will be a network built to serve as a smart contract layer for Polkadot, a project of the Web3 Foundation and ethereum startup Parity. Best known as the project that lost over $150 million worth of ether, Polkadot intends to bring interoperability to the world’s blockchains.

Edgeware will make it possible to bring smart-contract functionality to that network while running alongside it (on what Polkadot refers to as a parachain). Of note: Edgeware could be one of many smart contract parachains, depending on the needs of different developers.

“I’m backing Edgeware because I’m really excited about crypto-governance,” Zurrer, currently the director of the Web3 Foundation, told CoinDesk in an email.

How it works

The genesis block of Edgeware will create 5 billion EDG tokens, 90 percent of which will be distributed to participants in the lockdrop. After that, new tokens will be emitted at a fixed rate with each block.

To get EDG, users will need to hold ether. The amount of EDG they get will depend on how much they have and how long they decide to hold it.

“The lockdrop represents a novel way for people to get involved at very low opportunity cost,” Zurrer told CoinDesk. “Since you get your ETH back at the end of your lock-up, you can obtain EDG and experiment in this new community without sacrificing your plans for your Ether.”

Users have four options: they can lock up for three months, six months or a year. They can also just signal the chain from their wallet, but that’s by far the least lucrative.

So, a user with one ETH that locks for three months will get one share, six months gets 1.1 shares and a year gets 1.4. Signaling the smart contract only earns 0.6 shares and there’s a delay – the signal option won’t be paid out for a year after network launch, whereas all those who actually locked will get EDG as soon as Edgeware goes live.

An example: Let’s imagine that instead of 5 billion tokens there will be 500. And let’s imagine only four people take part, each choosing a different option with 10 ETH each. That would mean one had six shares, another had 10, another had 11 and the last had 14.

So, in this example, at network launch, the person who locked for three months would get 121.95 EDG. The person who locked for six months would get 134.146 EDG. The person who went for a year would get 170.73 EDG. A year after launch, the person who had only signaled would get 73.17 EDG.

But if instead of four people there were 40, with the same amount of ETH each and the same distribution, then each person would get only a tenth of the EDG as that shown in the example above.

It’s impossible to know at this point how many people will participate and how many will join at which level, but the point here is to give interested ETH holders a hurdle to their free tokens – but not too much of a hurdle.

“We think asking people to do the lockdrop can get us those early active community members,” Commonwealth’s Chen wrote.

The lockdrop will open on June 1 and potential participants will have until June 15 to choose their level of participation. Chen tells us that the blockchain should go live right after the contract closes, meaning that those in the lockdrop won’t need to wait to claim their new tokens.

“This will be very interesting, and I’m sure more novel mechanisms will emerge from this project that are beneficial to the whole industry,” Zurrer wrote.

Built to rule

Edgeware is also ready-made for crypto’s inevitable controversies.

Once live, it will come with a native voting mechanism so that no one will need to build a solution when a major controversy arises (as the ethereum community had to do after the DAO was hacked).

“It solves the problem of an insecure vote,” Chen wrote.

Following launch, Commonwealth looks forward to several new projects built around Edgeware, including creating an encrypted email platform that sends between various blockchain addresses, an anonymous voting system, becoming a Polkadot parachain and facilitating decentralized autonomous organizations.

“We think Edgeware is complementary to both Ethereum and Polkadot,” Chen wrote, adding:

“The goal is to serve a more progressive segment of developers through WebAssembly contracts and instant finality. “

Update (March 20, 18:55 UTC): Added additional clarity regarding the Edgeware parachain and the parties involved in the Polkadot project.

Photo of 1confirmation founder Nick Tomaino at Token Summit II via CoinDesk archives