LayerZero, a cross-chain interoperability protocol, has faced significant controversy with its newly launched token, ZRO.
The launched token saw a 19% drop since its launch, largely due to backlash over the donation criterion for claiming tokens. Some have compared this requirement to a “tax,” while others see it as a potential solution to the issues plaguing recent token airdrops. Upon its launch on June 20, ZRO initially surged 15.15% within just 20 minutes. However, it quickly plummeted 22% within two hours, a pattern many attribute to their peculiar claiming requirements.
Unique Claiming Mechanism
LayerZero has implemented a new claiming mechanism known as Proof-of-Donation. This mechanism requires users to donate a small amount of money per ZRO token, with the donations directed to the Protocol Guild, a collective funding mechanism for Ethereum developers.
LayerZero estimated that this initiative would result in approximately $18.5 million in donations. Additionally, the LayerZero Foundation has pledged to match all donations up to $10 million.
Community Reactions
The crypto community’s response to this mechanism has been mixed. Critics argue that requiring a donation for claiming tokens changes the nature of the “airdrop” to something more similar to an initial coin offering (ICO). One Twitter user expressed, “If you force a donation then it’s called a tax. I supported PG willingly in the past. If you want to support PG, you can donate directly or give an allocation to people who donated.”
On the other hand, some community members support the initiative, arguing that the donation mechanism benefits the broader crypto ecosystem. One user stated, “People whining about the donation on LayerZero airdrop are dumb. You are getting something free and being asked to donate a fraction of it to support a greater ecosystem. It’s a good way to set a base cost value for a token.”
LayerZero co-founder Bryan Pellegrino has defended the token launch, emphasizing that no one is obligated to claim the tokens if they do not wish to donate.
Eligibility Criteria and Airdrop Details
LayerZero’s airdrop has allocated 8.5% of the total ZRO supply to the community. This includes 5% for the core community, 3% for RFP (Request for Proposal) participants, and 0.5% for the community pool.
Eligibility criteria for receiving the airdrop included factors such as average trading volume, fees spent, L0 message count (with a minimum of 15 messages), and active participation over several months.
ZRO launched with a $934 million market capitalization and $3.7 billion FDV. ZRO’s price briefly hit a high of $4.71 before falling below $3.50, according to CoinMarketCap.
As the situation unfolds, it remains to be seen how LayerZero will navigate the backlash and whether the Proof-of-Donation mechanism will be adopted by other projects in the crypto space.
