7 Ways AllowLists Are Shaping The Future Of Web3

In the rapidly evolving landscape of Web3, the application of AllowList has emerged as a crucial mechanism for bringing inclusivity & security to build engaged communities.

The three terminologies, AllowList, AccessList, and WhiteList, are similar and can be used interchangeably. In this blog, I stick to AllowList.

AllowList in Web3 is a list of approved participants with exclusive access to participate in specific events or specific purposes. Usually, active, engaging & loyal users get allowlisted. Smart contracts can be written & deployed to set and enforce the criteria for inclusion on the AllowList.

AllowList is used for various purposes. 7 essential ways are listed below.

• ICO Pre-Sale
• NFT Pre-Sale
• AirDrop
• Testing dApps
• Decentralized Finance
• Governance
• Loyalty Programs

Let’s look into each use case in detail.

ICO Pre-Sale

Initial Coin Offering or ICO is a way of receiving investment for a Web3 company or project. ICO is equivalent to an Initial Public Offering in traditional terms. Public receives a share of the company in IPO. In Web3, the public receives a share of the company, gaining ownership in exchange for a coin or token.

Securing a spot in ICO AllowList is a strategic move for any early ICO investor. AllowList is helpful for users to guarantee their Initial ICO Token Allocation even before the ICO reaches the public. To explain more straightforwardly, AllowList is very helpful in ICO Pre Sale. 

As discussed, AllowList allows individuals to participate in ICOs even before they open to the public. This provides an advantageous position in the Web3 investment landscape. AllowList also helps you gain a financial advantage.

Allow-listed users to acquire access tokens at discounted rates. Allow-Listed users can gain early exposure to promising projects. Web3 enthusiasts and investors are after attaining AllowList status for ICO allocations.

Having discussed ICO Pre-Sale, now let’s dive into discussing NFT Pre-Sale.

NFT Pre-Sale

Like ICOs, AllowList is used in NFT pre-sales to give certain early users the right to mint (publishing NFT on the BlockChain) and purchase NFT before the general public.

Fostering a sense of community is essential for the success of any project and business. AllowList does that well. It helps create engaged community members and thoughtfully manages the demand for NFT.

Users have to pay gas fees to verify transactions on the BlockChain. While more people try to mint NFT in the BlockChain, it causes competition, resulting in increased gas fees, which is called the Gas War. AllowList helps eliminate those gas war problems. It helps early supporters,

The creators and sellers of NFTs select individuals who have met their eligibility criteria. The criteria can be anything the creator sets, such as liking, sharing, and tagging friends in the comments on the project's social media post.

How about moving to discuss AirDrop? Read on.

AirDrop

The term "AirDrop" generally refers to sending out free crypto assets like NFT to wallets. It involves the collection of BlockChain addresses with the help of AllowList. Then, the Allowlisted Wallet addresses are sent free assets.

AllowList fuels targeted distribution of Crypto Assets. There is a carefully curated selection of Wallet Addresses that pass eligibility requirements. These pre-approved wallets are then targeted to receive NFTs and similar assets.

Bots and spam continue to affect all new technologies. AllowList came as a cure-all to fight against bots and spam in Web3. It prevents bots from claiming a disproportionate share of airdropped assets, fostering a sense of community.

Determination of wallet addresses is mostly based on meritocratic criteria, such as active users who contribute to open-source projects. The holding requirement is checked based on how much crypto the wallet holds on the snapshot date.

Do you know? AllowList fuels dApp testing. Read on.

Testing dApps

Testing is an essential aspect of the successful creation of any Software application. Web3 Developers might use AllowLists to give access to early versions of their decentralized apps (dApps). This allows for controlled testing and feedback gathering.

It amounts to gathering a dedicated user base for beta testing the dApps before a full public release. AllowList collects the BlockChain wallet addresses permitted to access & interact with the dApp during the testing phase.

Early-stage dApps can be vulnerable to exploits, and limiting access to trusted AllowList users can help mitigate the risk. It helps assemble a controlled user group more familiar with technology and the project’s goals to test the product.

Another good thing about AllowList is that dApp scalability is tested gradually by proportionately increasing the number of allowed users. It also fuels regulatory compliance by including Wallet addresses from authorized jurisdictions only.

Diving to DeFi space now.

Decentralized Finance

DeFi, known for its open and permissionless access to financial services via blockchain technology, requires mechanisms to control access to certain offerings for strategic reasons. Using AllowLists here enhances security within the ecosystem.

For instance, they can restrict participation in particular financial services to users who have passed Know Your Customer (KYC) and Anti-Money Laundering (AML) checks, ensuring compliance with regulations in various jurisdictions.

Allowlists can ensure that access is distributed fairly among interested users, preventing bottlenecks and ensuring a smoother user experience.

Some projects take snapshots of their blockchain at a specific time to identify eligible users for the AllowList. This can be based on their token holdings, activity, or other criteria during the snapshot time.

Let’s discuss Governance now.

Governance

AllowLists can play a role in decentralized governance, allowing voting or proposal rights to users on the AllowList.

Governance decision-making processes are inclusive, secure, and aligned with the interests of committed stakeholders. AllowList can be used to ensure that only stakeholders with a vested interest in the project's success can influence its direction.

Many new methodologies like AllowList are emerging to address the complexities of decentralized decision-making.

In decentralized voting systems, one entity could potentially create multiple addresses to influence the outcome disproportionately. Allowlists help prevent such Sybil attacks by ensuring that only verified and approved participants can participate in governance.

Ending with Loyalty use case.

Loyalty Programs

Traditionally, Loyalty programs are well-established mechanisms designed to enhance customer retention, encourage repeat business, and build a strong relationship between a brand and its customers.

Web3 Projects might create AllowLists to reward loyal customers or users with special perks, such as discounts, exclusive content, or special rights within the ecosystem.

Allowlists become critical for identifying and rewarding stakeholders who have demonstrated loyalty or contributed significantly to a project or platform.

The process of creating and managing an AllowList for loyalty programs also can provide valuable data on user behavior and preferences, enabling projects to tailor their offerings and improve user experience over time.

Moving to Concluding thoughts.

Concluding Thoughts

As with any tool, the effectiveness of AllowLists depends on thoughtful implementation. Projects must balance inclusivity with exclusivity, ensuring that AllowLists do not become barriers to entry but rather gateways to deeper engagement. Transparency in the inclusion criteria is essential in maintaining the community's trust and support.

As the digital landscape shifts towards more decentralized and community-driven models, AllowLists stands out as a critical tool.

In conclusion, AllowLists represent more than just a technical solution; they embody a strategic approach to community engagement in the Web3 era. By leveraging AllowLists, projects can achieve their immediate objectives and lay the groundwork for a more inclusive community—a cornerstone for long-term success in the decentralized world.