LayerZero's Anti-Sybil Strategy Sparks Controversy Ahead of First Token Airdrop
Summary:
LayerZero, a cross-chain interoperability protocol, is planning its first token airdrop amidst controversy over its anti-sybil strategy designed to combat token farmers. Critics argue that the strategy unfairly targets prolific airdrop farmer, Merkly, which the LayerZero ecosystem uses. Despite the controversy, CEO Bryan Pellegrino insists the move is meant to guarantee airdrop tokens are only sent to genuine users. LayerZero's anti-Sybil method is generating interest among venture capital firms, despite creating friction within their user community.
LayerZero, an interoperability protocol dedicated to bridging diverse blockchains, is about to make its initial token airdrop. However, their method to battle token farmers known as the "anti-Sybil strategy" is creating disputes. Sybil actions occur when an individual or organization creates numerous wallets to interact with a protocol with the goal of benefiting multiple times from its airdrop. Although this can make the protocol seem highly respected in the short term, it does not contribute long-term value.
The argument is primarily around LayerZero's disparaging portrayal of Merkly, a decentralized application (DApp) responsible for cross-chain bridging, which LayerZero has labelled a “Sybil farming application". Intriguingly, LayerZero prominently presents Merkly on its own webpage, sharing that it's a key part of LayerZero's application "ecosystem".
Cointelegraph had a conversation with CC2, an influential airdrop farmer and Merkly consultant, to gather more insights about the ongoing contentious situation. CC2 confessed the situation has been disorienting for users, but understands it from LayerZero's perspective. He revealed that initially, Merkly appeared to be established solely to take advantage of the LayerZero airdrop fervor. However, its scope has since significantly expanded.
CC2 made it clear that despite the unwanted label of “Sybil farming”, the use of Merkly should not automatically exclude airdrop seekers. Instead, only “extreme usage” should lead to disqualification. CC2 also questioned the necessity of the anti-Sybil campaign, led by LayerZero CEO Bryan Pellegrino.
Despite the controversial anti-Sybil campaign employed by LayerZero, some in the community still appreciate the efforts. Pellegrino has asserted that this method is meant to ensure that airdrop tokens are distributed to real users, which LayerZero refers to as “durable users”.
Amid increasing privacy fears, venture capital firms are showing interest in airdrop strategies. Cointelegraph received insights from George McDonaugh, co-founder and co-managing director of KR1, regarding this. McDonaugh revealed that a VC firm would be very interested in how a team would approach reducing Sybil attacks.
Titus Capilnean, from digital ID service Civic, suggests one solution for avoiding such issues, liveness checks. It assures that each user is linked to an unique identity. However, this could face resistance in the world of crypto, where users are notoriously suspicious of any kind of ID checks and hesitant to provide any personal information or biometric data.
Debra Nita, a senior crypto strategist at public relations firm YAP Global, explains that other protocols could be hesitant to adopt better verification processes due to potential reputational damage. This might result in excluding a large number of users right from the start, impacting community sentiments, key stakeholders, and legal standing.
As a result, the ongoing dilemma of verifying identity while maintaining privacy in decentralized finance (DeFi) remains unsolved. Protocols and their executives are continuing to address this issue, sometimes encountering substantial community backlash in the process. LayerZero did not provide a response to Cointelegraph for this report at the time of publication.
Published At
5/28/2024 4:30:00 PM
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