Jun 21, 2024 at 11:05The newly launched LayerZero (ZRO) token saw a sharp decline of 17% amid controversy surrounding its unique claim mechanism, which critics have labeled a “tax.”
After its launch on June 20, ZRO initially surged 15.15% to reach $4.71 in just 20 minutes. However, it quickly plummeted 22% within two hours, a common pattern seen in token airdrops as recipients sell their tokens. The controversy stems from LayerZero’s requirement for users to donate a small amount of money per ZRO token to claim them.
LayerZero’s announcement on June 20 stated that to claim ZRO, users must donate $0.10 in USDC, USDT, or native ETH per token, with proceeds going directly to the Protocol Guild. This donation mechanism is projected to generate approximately $18.5 million for the Protocol Guild, a funding collective for Ethereum developers.
The crypto community reacted strongly, with many arguing that this donation model turns the “airdrop” into something resembling an initial coin offering (ICO). Comments on LayerZero’s post included criticisms like “Is this a joke” and “how about you pay for that.”
LayerZero insists that the ZRO launch is “not an airdrop.” In a statement on June 20, the company argued that traditional airdrops no longer meet the goals of equitable distribution, community building, and protocol health. This is partly due to the rise of airdrop farming and Sybil entities—those creating multiple wallets to maximize their airdrop claims.
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LayerZero co-founder Bryan Pellegrino defended the token launch, emphasizing that no one is forced to donate or claim the tokens. He stated, “There is no forced donation, if you don’t want to donate… simply don’t claim. This is not something you own, it’s something being offered.”
Despite the backlash, some in the crypto community see the donation mechanism as a positive step. Adam Cochran, for example, noted that the donation supports a “greater ecosystem” and adds a base cost to deter Sybil operations.
Meanwhile, the ZRO token has continued to trade lower, with its price falling to $3.35, down 17% over the last 24 hours, according to CoinMarketCap.
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