LayerZero’s ZRO Token Airdrop Receives Backlash For ‘Proof-Of-Donation’ Mechanism

by

As a researcher with experience in the crypto industry, I’m deeply concerned about the recent backlash against LayerZero’s ZRO Token airdrop and the new “Proof-of-Donation” mechanism. While it’s important to note that every project has its unique distribution model, the community reaction raises valid concerns regarding fairness and transparency.

As a cryptocurrency market analyst, I’ve noticed yet another airdrop causing quite a stir in the crypto community this week. Specifically, LayerZero – an omnichain interoperability protocol – unveiled its new ZRO Token and promised an airdrop to its supporters.

As a crypto investor, I was taken aback when the protocol unveiled its new “Proof-of-Donation” mechanism. Unfortunately, the token’s value took a hit, plummeting by more than 20%, following this announcement.

LayerZero Faces Backlash For Token Airdrop 

On June 14th, I, as an analyst, observed the LayerZero Foundation making an announcement about an upcoming airdrop through a teaser. That day, Bryan Pellegrino, co-founder and CEO of LayerZero Labs, revealed the essential information regarding this airdrop to the public.

As a researcher, I’ve come across some intriguing information regarding the token distribution in our project. The CEO announced a total supply of 1 billion ZRO tokens, with an impressive 23.8% allocated directly to the community. He further clarified that out of this community share, 8.5% would be distributed on day one. The remaining portion, which makes up the rest of the 23.8%, will be meted out over a period of 36 months.

In May, the protocol unveiled its anti-Sybil tactics for the forthcoming token dispersal. These tactics comprise a self-declaration mechanism for Sybil accounts, rewarding 15% of the planned allotment to those who confess their identities. Furthermore, LayerZero initiated a bounty program.

Although it faced criticism, the distribution method for the protocol drew some opposition. Certain users argued that the initial 8.5% allocation was insufficient, while others felt frustrated as their token allotment seemed to disproportionately represent their transaction history.

A top 0.13% LazerZero user reportedly received 39.28 ZRO in the airdrop. This amount drew comparisons to zkSync’s distribution due to its substantial size.

Last week, there was strong criticism from the crypto community towards Ethereum‘s scaling solution zkSync, just before its scheduled ZK token distribution. Investors voiced their concerns over the unequal token distribution and absence of Sybil filtering mechanisms during this time.

From Hero To ZRO? 

As a crypto investor, I’ve been following the developments between zkSync and the LayerZero Foundation closely. However, things really started to heat up for me on Thursday. Prior to the airdrop, the foundation unveiled its new claiming mechanism, which they called “Proof-of-Donation.”

According to the post, each user is required to contribute $0.1 worth of USDC, USDT, or ETH for every token they wish to receive. These contributions will be channeled directly to the Protocol Guild, which serves as a community-driven financing platform for Ethereum developers.

The LayerZero Foundation projects that the new mechanism could potentially bring in a donation total of up to 18.5 million dollars. Furthermore, they have pledged to double every contribution, with a maximum limit of ten million dollars.

As an analyst, I’d rephrase it as follows: The community of this protocol swiftly voiced their displeasure with the recent announcement. One member labeled it a “Pay to Claim” airdrop, strongly criticizing it as an underhanded attempt to exploit users, implying that LayerZero would have won the metaphorical “milking your users” Olympics if such an event existed.

One user expressed disappointment over the timing of the announcement, which came just prior to the airdrop event. The compulsory contribution was perceived by some investors as an unwelcome surprise. Furthermore, several individuals view the updated claiming process as more akin to a tax than a charitable donation.

Pellegrino countered the objections towards X by pointing out that no one is compelled to make a donation. Moreover, he emphasized that users do not hold any inherent rights to the tokens.

If you prefer not to make a donation… just decline the offer. It’s not something that belongs to you; rather, it’s something being extended kindly.

As of this writing, ZRO has gone from $4.79 to $3.39, representing a 22% drop in four hours.

Read More

2024-06-21 06:05