Crypto Snapshot
What Is a Snapshot in Crypto?
A blockchain snapshot is a detailed record of the state of a blockchain at a specific block height. It captures the entire status of the network at a given moment and serves as a freeze-frame of the blockchain, providing a comprehensive view of its data. Key elements included in a blockchain snapshot are:
- Account balances. A snapshot includes the holdings of every user or entity on the blockchain.
- Transaction records. Detailed logs of crypto transactions and asset exchanges that have occurred up to that point.
- Digital asset details. Information about digital assets, including their type, properties, and status.
- Smart contract information. The state of any active smart contracts, including their terms and conditions.
How Crypto Snapshots Work
The process of taking a snapshot consists of several steps:
Step 1. State capture
At the moment of the snapshot, the system records the entire state of the blockchain. It includes each crypto wallet balance, the status of any staked assets, and the total number of tokens held. The snapshot is tied to a unique block height, acting as a precise timestamp of the blockchain’s state.
Step 2. Data storage
Once the snapshot is taken, the recorded data is securely stored for future reference. It means the snapshot can be used for a variety of purposes:
- Verifying eligibility for upcoming events
- Restoring system functionality
- Analyzing historical trends
For instance, if a company declares that users holding 100 X tokens will receive an additional 10 Y tokens, the snapshot will capture which accounts met the X token requirement at that definite time.
Use Cases of Crypto Snapshots
Below are the most common use cases of blockchain snapshots:
- Airdrops and token distribution
One of the most popular uses of crypto snapshots is for airdrops and token distributions. Blockchain projects distribute tokens to users based on their wallet balances at the moment of the snapshot. Snapshots are used here to prove that tokens are allocated fairly to eligible users without any additional steps required on their part.
After the snapshot is taken, users are free to move or transfer their tokens without affecting their eligibility for the airdrop or distribution event. This system creates a transparent process, where each participant’s wallet balance is recorded at a fixed point in time.
- Blockchain hard forks
Snapshots mark the exact point when a ledger is duplicated and a new network is formed. This method ensures that both chains share the same historical data up to the snapshot point, enabling them to evolve as independent networks moving forward.
- Initial exchange offerings (IEOs) and token sales
Crypto exchanges frequently use snapshots to identify eligible participants for token sales or Initial Exchange Offerings (IEOs). To ensure a fair distribution of tokens, exchanges may take periodic snapshots of users’ wallet balances over a defined period. It helps prevent any manipulation where users might artificially inflate their balances before the sale. In some cases, exchanges take multiple snapshots and calculate an average balance to further promote fairness and transparency.
- Network upgrades and migrations
During major blockchain upgrades or migrations, snapshots help ensure that users’ account balances, transactions, and holdings are accurately transferred to the new system. Using snapshots, developers can guarantee that no data is lost during these critical changes.
- Security and Recovery
Snapshots also act as security and recovery tools. If a blockchain faces a network attack or a significant vulnerability, developers can roll back the system to a previous snapshot. This restoration method minimizes potential losses and guarantees the blockchain can maintain its integrity and user trust. In such a way, snapshots serve as an essential backup mechanism and ensure the network’s resilience in times of crisis.