LayerZero, a cross-chain interoperability protocol, recently launched its new token, LayerZero (ZRO), which has experienced a 17% decrease since its launch. This decline is due to the controversy surrounding the donation criterion required to claim tokens, which some have compared to a “tax.”
The ZRO token surged 15.15% to $4.71 within 20 minutes of its launch on June 20, but then plummeted by 22% within two hours, a common occurrence in token airdrops as recipients tend to sell their newly acquired tokens quickly.
The controversy arose from the requirement for users to donate a small amount of money per ZRO token in order to claim them. According to LayerZero, users must donate $0.10 in USDC, USDT, or native ETH per ZRO, with the donations going directly to the Protocol Guild, a collective funding mechanism for Ethereum (ETH) developers. This move was met with criticism, with many users arguing that the requirement to “pay” a “tax” transforms the nature of the “airdrop” into something more akin to an initial coin offering (ICO).
LayerZero has defended its position by stating that the recent launch is “not an airdrop,” arguing that airdrops no longer contribute to the goals of equitable distribution, community building, and protocol health, as initially intended. This is mainly due to an increase in airdrop farming and Sybil entities that create and use numerous wallets to farm an airdrop.
Bryan Pellegrino, the co-founder of LayerZero, has spent time defending the token launch, reiterating that no one is entitled to the tokens and that users who do not wish to donate should refrain from claiming them.
On the other hand, some members of the crypto community see the ZRO’s donation claiming mechanism as a step in the right direction for future airdrops. They believe that the donation is used to support the greater ecosystem and to set a base cost value for a token, making it less likely for Sybil operations to occur in the future.
At present, ZRO is trading at $3.35, marking a 17% decrease over the last 24 hours, according to data from CoinMarketCap. The article does not offer investment advice or recommendations, and readers are encouraged to conduct their own research before making any investment decisions.