LayerZero's New Token ZRO Drops 17% amid 'Donation-for-Tokens' Debate
Summary:
LayerZero, the cross-chain interoperability protocol's token, ZRO, experienced a 17% decrease in value a day following its launch amid an ongoing debate about its unique token claim mechanism which involves a small donation. Despite facing criticism from the crypto community who likened the model to a "tax", LayerZero defends the initiative and asserts that if users are unwilling to donate, they should refrain from claiming the tokens. While values fluctuated rapidly on the launch day, some within the community believe this donation-based model might serve as a blueprint for future airdrops.
The newly introduced LayerZero (ZRO) token from LayerZero, a cross-chain interoperability protocol, experienced a 17% drop-in value a day following its debut, amidst an ongoing debate regarding its unique donation requirement to obtain tokens. Some critics dub the obligation as a form of "tax", but there are those who view it as a potential answer to problems engulfing recent token airdrops. ZRO's launching day, June 20, witnessed a 15.15% spike in value to $4.71 within 20 minutes, followed by a 22% plunge in the next two hours. This pattern of swift rise and rapid fall is commonly seen after token airdrops, which see beneficiaries immediately selling off their new tokens.
LayerZero has introduced an uncommon condition for users intending to claim ZRO tokens - they need to submit a small donation for each token. As per an announcement by LayerZero, a $0.10 contribution in USDC, USDT, or native ETH would be necessary for each ZRO. The contribution, according to the company, will be collected by the Protocol Guild. LayerZero estimates that the total amount accrued through these small donations would accumulate to around $18.5 million, which would then be directed towards supporting Ethereum developers via Protocol Guild.
However, this move has drawn criticism from the cryptocurrency community, as detractors argue that the donation requirement changes the nature of the “airdrop” and makes it resemble an initial coin offering (ICO) more closely. On the other hand, LayerZero continues to stress that the recent introduction of the ZRO tokens does not fall under the traditional definition of an "airdrop".
On the same day of the launch, LayerZero made a case that airdrops no longer contribute to their initial objectives, such as fostering a widespread distribution, community growth, and maintaining the well-being of the protocol. This change, according to LayerZero, has been precipitated by the increase in airdrop farming and growth in Sybil entities, who create and manage a large number of wallets to exploit airdrops.
Bryan Pellegrino, Co-founder of LayerZero, has spent a considerable amount of time defending the newly introduced token, asserting that one has no inherent right to the tokens. He further emphasized that those who are not interested in contributing should simply avoid claiming the tokens.
Despite the controversies, certain people within the crypto space are of the opinion that LayerZero's donation-based token claiming could potentially provide the right model for future airdrops. They assert that the modest donation required is a valuable resource for supporting a larger ecosystem and helps to set a baseline value for the token.
The value of the ZRO token, which saw a brief high at $4.7 before quickly dropping below $3.50, is currently pegged at $3.35, reflecting a 17% decrease over the past 24 hours.
Published At
6/21/2024 6:39:59 AM
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