1inch’s cumulative Merkle drop tool: an overview
The tool facilitates multiple token airdrops, making the distribution cheaper and more efficient.
As part of a series on developer tools built by the 1inch core contributor team, this article introduces the 1inch cumulative Merkle drop tool. It facilitates optimized gas costs and top-level security in a situation where regular airdrops to the same addresses need to be performed.
Traditional token airdrops may work fine in situations when tokens need to be distributed just once. However, when, for instance, tokens have to be sent to the same addresses regularly, the sender and receiver have to pay transaction fees every time, which could make airdrops quite costly for both sender and receiver.
The 1inch Network developed its own solution to the problem — the cumulative Merkle drop tool. Now, to airdrop tokens to an existing address list, the sender only has to update the Merkle tree root, which is cheap and easy, regardless of the number of receiving addresses.
Meanwhile, the tool facilitates cost savings not only for senders, but also for receivers. For instance, a receiver of regular small airdrops can collect several of them using a single proof and paying just a small fee as opposed to paying a fee for each collection.
The above table illustrates the difference between various methods of token drops. As you can see, regular token transfers are most expensive for the sender, and simple internal balance updates are still costly for the sender, while the receiver also has to pay a fee, which could be disproportionately high compared with the size of a small drop.
In case of multiple single drops, both sender and receiver have to pay relatively high fees. Conversely, the 1inch cumulative Merkle drop tool envisages only small fees for senders and receivers.
The reversibility of transactions is another advantage for the sender, as they, for instance, could recover distributed tokens to avoid permanently losing them in case of a bug. Meanwhile, the receiver needs to claim the tokens in time to make sure that the translation can’t be reversed.
1inch’s cumulative Merkle drop tool already has several use cases.
The first of them is sending gas refunds to 1inch users under a gas refund program on a monthly basis. The 1inch Network also uses this tool in various marketing activities. For instance, the 1inch cumulative Merkle drop tool came in handy when sending awards to the winners of the DeFi Racer mobile game tournaments.
Other projects have also adopted the tool. RealT, focused on real estate tokenization, uses 1inch’s cumulative Merkle drop tool to send rental revenues on tokenized properties to thousands of its users.
RealT users invest in RealTokens corresponding to fractions of various real estate properties that are rented out. RealToken holders are entitled to regular payments on rented properties, fractions of which they own, and payments are made using 1inch’s cumulative Merkle drop tool.
“The 1inch Merkel drop tool has helped us to save tens of thousands in operational costs monthly,” says Rémy Jacobson, RealT co-founder and co-CEO. “Moreover, this enabled us to make rent payments to crypto landlords without delays on a weekly basis.”
To integrate the 1inch cumulative Merkle drop tool, check out the documentation. If you have any questions, get in touch with us.
You can also suggest your own solution and apply for a 1inch grant.
And stay tuned for more articles explaining 1inch tech!