LayerZero Airdrop Controversy: Traditional Token Distribution Mechanisms Face Challenges

LayerZero Airdrop Sparks Controversy, Traditional Airdrop Mechanism Faces Challenges

After more than a month of verification activities, the LayerZero Foundation recently announced the Airdrop eligibility query page. However, the much-anticipated Airdrop results have disappointed many users.

As one of the potential airdrop projects that has attracted significant attention recently, LayerZero has raised high hopes within the community, expecting a "big gesture" airdrop. However, as the review activities progressed, a large number of accounts were marked as ineligible, leaving many users who had put in over six months of effort with nothing to show for it.

The controversy caused by this airdrop is considerable, with users questioning the sincerity of the project team, while also prompting reflection on whether the current token distribution model in the industry needs reform.

LayerZero Airdrop causes controversy, has the era of profit-seeking come to an end?

One Month Inventory Check Activity

LayerZero was established during the bull market in November 2021. With strong capital support and promotion from industry opinion leaders, the project quickly rose to prominence. The announcement of the governance token Airdrop attracted significant attention within the community. The project's strong background, high valuation, and industry position have led many to anticipate substantial returns, attracting a large number of participants. Data shows that since last April, the on-chain interactions of LayerZero have increased significantly, with daily transaction counts reaching as high as 490,000. Such high-frequency interactions not only enhanced the platform's data performance but also generated considerable revenue.

Amidst soaring expectations, the community's anticipation for the LayerZero Airdrop has remained high. Despite frequent news about the airdrop, the date has been postponed repeatedly. On May 2nd of this year, LayerZero finally announced that the first phase of the snapshot has been completed, and market sentiment has reached its peak.

Research institutions predict that the value of LayerZero's Airdrop could be between 600 million to 1 billion dollars. Under conservative estimates, each user may receive between 750 to 1500 dollars; optimistic estimates could reach up to 1350 to 2700 dollars.

However, just as users were filled with anticipation, LayerZero suddenly announced an unexpected decision. On May 3, the official announcement stated that to ensure the fairness of the Airdrop, a month-long account review would be conducted.

This review introduces a novel "reporting mechanism". The review is divided into three stages: first is a 14-day self-disclosure period, during which users can voluntarily report non-compliant behavior and retain 15% of the Airdrop allocation; second is the official review stage, where non-compliant accounts will lose all Airdrop eligibility; the most controversial is the reporting mechanism in the third stage, where anyone can submit a report, and successful reporters will receive 10% of the reported party's Airdrop allocation, with the remaining 90% returned to the Airdrop pool.

In the end, LayerZero Labs CEO Bryan Pellegrino stated that a total of 1.28 million addresses are eligible, and approximately 10 million tokens will be returned to real users. The review results show that 803,000 addresses were deemed potentially ineligible, among which over 338,000 addresses self-reported.

Controversies and Doubts

With the end of the review, the long-awaited Airdrop finally arrives, but LayerZero has fallen into new controversy. While most users are dissatisfied with the results of the Airdrop, there are still some users who reported receiving a large amount of ZRO tokens. These lucky ones mostly hold collectibles from a certain NFT project. For example, an address holding 50 of that NFT received 5335.55 ZRO, while another address received 10,000 ZRO for holding 152 NFTs. On average, each NFT received about 100 ZRO, adjusted according to rarity.

This has raised users' doubts about the project's favoritism. However, according to NFT trading data, there is no significant correlation between the trading peak of the NFT project and the LayerZero Airdrop snapshot time, and the official social media account has been operating normally. Therefore, the related accusations have not been substantiated.

At the same time, many users have expressed that they have invested a lot of effort and expenses, but can only obtain a small amount of tokens. Based on the current price, this is far from covering the costs. Users believe that LayerZero's recent Airdrop lacks sincerity.

A user who received a large amount of Airdrop posted that the Airdrop allocation for ordinary users from LayerZero is disappointing: "Accounts in the top 1% only received 200-500 tokens, which is too unreasonable..."

Some even believe that this airdrop may signify the end of the traditional airdrop model.

Not only the ZRO Airdrop, but recent airdrops from other projects have also sparked similar controversies. Issues such as the number of qualified addresses being lower than expected, lack of transparency in the decision-making process, and the frequent appearance of suspicious addresses have raised doubts about multiple airdrops.

The core issue lies in the community's dissatisfaction with the Airdrop distribution. Ordinary users find it difficult to determine how to meet the official standards, while the project's "final interpretation right" raises suspicions of operational opacity, leading to tokens being allocated to a few individuals who sell off the tokens, leaving retail investors to pick up the pieces, while the remaining token supply continues to be unlocked, further depressing the market.

In contrast, the early Uniswap Airdrop appeared to be more transparent and fair. As long as one has used Uniswap, everyone could receive 400 UNI. Although this no-threshold airdrop has also faced criticism, in the current environment where airdrops are frequently criticized, UNI's approach seems to be more successful.

Some opinions suggest that the fundamental reason for the strong dissatisfaction caused by the ZRO Airdrop is that it disrupted the balance between investment institutions, project parties, and ordinary users. Ordinary users are at the weakest position in this game. Project parties need user data to attract investment, while investment institutions need tokens to cash out. Project parties attract users to contribute data for free by promising tokens that may be obtained in the future.

This is one of the reasons for the prevalent anti-institutional sentiment in the current Web3 space. Due to the excessive pursuit or misjudgment of certain investment institutions, these projects have obtained overly high valuations, but are unable to form reliable business models, and can only rely on issuing tokens to make retail investors pay for their poor-performing assets.

Although recent airdrops have been disappointing, participating in airdrops still represents a potential way for ordinary users to gain profits, even though the returns are continuously decreasing.

Future Airdrop Projects to Watch

  1. Manta Network: A multi-chain supported token project that plans to allocate 40% of its tokens to liquidity providers.

  2. Canto: A blockchain project based on Cosmos SDK, 70% of the tokens will be allocated to cross-chain users.

  3. DappRadar: A DApp data analysis platform, 90% of the tokens will be allocated to RADAR stakers.

  4. KelpDAO: A liquidity re-staking protocol, 40% of the tokens will be allocated to cross-chain users.

  5. Pendle: A yield trading protocol where 90% of the tokens will be allocated to vependle holders.

These projects each have their own characteristics and employ different token distribution strategies, which may bring new opportunities for users. However, participants still need to carefully assess the risks and participate rationally.

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MonkeySeeMonkeyDovip
· 18h ago
It was really hard work, and I ended up getting it for free for half a year.
View OriginalReply0
MrRightClickvip
· 18h ago
No way, it was sent again.
View OriginalReply0
rekt_but_not_brokevip
· 18h ago
Here to play people for suckers again, huh?
View OriginalReply0
DefiEngineerJackvip
· 18h ago
*sigh* another suboptimal sybil detection mechanism... clearly they haven't read my 2022 paper on nash equilibrium in airdrop games
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SleepyArbCatvip
· 18h ago
Just woke up... the trap dog didn't run clean, it's doomed, aww.
View OriginalReply0
GasFeeBeggarvip
· 18h ago
Half a year of hype went to waste.
View OriginalReply0
blocksnarkvip
· 18h ago
Ha, I knew there wouldn't be a share for me.
View OriginalReply0
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