LayerZero Airdrop Sparks Controversy, ZRO Price Tanks

The recent launch of the LayerZero (ZRO) token, a new addition to the cross-chain interoperability protocol LayerZero, experienced a significant drop of 17% in value shortly after its release.

This decline occurred amidst a wave of controversy over a donation requirement imposed for token claims, an approach that has drawn comparisons to a tax and sparked debates within the cryptocurrency community.

Launch and Initial Market Response

LayerZero’s innovative claim process, introduced on June 20, requires users to donate a nominal amount—specifically $0.10 in USDC, USDT, or native ETH—for each ZRO token claimed.

The company detailed that these donations would directly benefit the Protocol Guild, aiming to accumulate approximately $18.5 million to support Ethereum developers.

Initially, ZRO’s value surged by 15.15% to $4.71 within the first 20 minutes of its launch, demonstrating the market’s volatile response typical of new token airdrops.

However, this enthusiasm was short-lived as the price plummeted by 22% within the next two hours, reflecting a common pattern where claimants sell off their tokens quickly after acquisition.

The requirement to make a donation for claiming tokens led to intense scrutiny and dissatisfaction among users, many of whom took to LayerZero’s announcement post to express their disbelief and displeasure.

This backlash centered on the argument that the donation requirement transformed what was supposed to be an airdrop into something resembling an initial coin offering (ICO), fundamentally changing its nature.

LayerZero has firmly stated that the token launch should not be classified as an airdrop, citing that traditional airdrops no longer meet their initial objectives of equitable distribution, community building, and enhancing protocol health.

The company emphasized that the issues plaguing recent airdrops include token recipients who lack a long-term interest in the projects and an increase in airdrop farming and Sybil entities—users who create multiple wallets to claim as many tokens as possible.

Company Defense and Community Support

Bryan Pellegrino, co-founder of LayerZero, spent much of the launch day addressing concerns and clarifying the company’s stance. He stressed that the donations are voluntary and that those unwilling to contribute can simply choose not to claim the tokens.

Pellegrino shared his exhaustion from the day’s events, indicating a plan to disconnect and rest after a strenuous day of defending the token’s launch strategy.

Despite the criticisms, some members of the crypto community see the donation mechanism as a potentially positive development for future airdrops.

Adam Cochran argued that the donation helps support the broader ecosystem and establishes a base cost for the token, which could deter Sybil attacks in the future.

Similarly, Connor King, a developer at Irys, praised the user interface and user experience of the ZRO claim page, comparing its smooth operation to popular applications like Spotify Wrapped.

Comparative Perspective and Market Status

In contrast, another recent airdrop by zkSync on June 17 highlighted challenges in deterring Sybil attacks despite an explicitly designed Sybil detection system and unique airdrop strategy aimed at maximizing genuine user participation.

As the debates continue, ZRO is trading at $3.15, down from its $4.71 peak, according to the latest data from CoinMarketCap. The ongoing discussions underscore the evolving nature of cryptocurrency launches and the community’s search for more effective and fair distribution mechanisms.