LayerZero Readies Highly-Anticipated Airdrop Amid Concerns Over Impact of Airdrop Squatters
Summary:
LayerZero, a protocol specialized in cross-chain interoperability, is readying its airdrop for users, according to LayerZero Labs. ZRO, LayerZero's token, is poised to have a fully diluted valuation of approximately $17 billion if it continues to trade at $8.3 per ZRO Hyperp. Airdrops, often used by DeFi protocols to reward early users, have ethical questions related to 'airdrop squatters', who abuse the system for short-term gains and destabilize the token's value. A token launch for LayerZero is expected in early 2024.
LayerZero, a protocol dedicated to cross-chain interoperability, is gearing up to release the much-anticipated airdrop to its users. LayerZero Labs announced the completion of the inaugural snapshot for the imminent airdrop on May 2, stating in an X post that further details would be forthcoming.
LayerZero Labs
Decentralized finance (DeFi) protocols frequently use airdrops as an effective strategy to incentivize user engagement by disseminating freshly minted cryptocurrencies to their earliest users. LayerZero's ZRO became the first-ever Hyperp (Hyperliquid-only perp) to be introduced on the HyperLiquid perpetual futures decentralized exchange (DEX) in September 2023. If ZRO Hyperp continues to trade at its current rate of $8.3, it could suggest a fully diluted valuation (FDV) of approximately $17 billion, Hyperiquid's anonymous prime contributor, Xulian, suggested in an X post on May 2.
Hyperps function in a manner similar to perpetual futures contracts, with the exception that they don't need an underlying spot or index oracle price. Hyperliquid is recognized globally as the top-ranking perpetual futures DEX, considering both trading volume and Open Interest.
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Despite not sharing further particulars regarding the airdrop, LayerZero Labs has hinted at planning for a token launch sometime early next year, as revealed in an X post dated December 7:
"From the inception, LayerZero has been designed with the capability to integrate a native token into the protocol... It is our objective to correctly execute its distribution, which we anticipate will take place in the first half of 2024.”
The question of whether airdrops might damage DeFi protocols in the long run has been raised. Despite the aim of airdrops to boost protocol usage via early adopter rewards, the biggest winners aren't consistently the users themselves.
Cryptocurrency airdrops frequently attract professional airdrop "hunters" or "squatters" who multiply farm the same airdrop through various crypto wallets, with no long-term plan of utilizing the protocol, solely to offload the rewards post-claiming in the market.
In a February warning, Yearn.finance's pseudonymous developer, Banteg, noted that the most significant proportion of the Starknet's airdrop eligibility list was made up of airdrop squatters. Allegedly, about 701,544 out of the 1.3 million eligible addresses were linked to duplicate or renamed GitHub accounts managed by squatters.
On May 1, Chinese authorities apprehended a StarkNet airdrop identity thief who falsely assumed the identities of other users, claimed over 40,000 STRK tokens in their names, and then exchanged them for roughly $91,000 worth of Tether (USDT).
In March 2023, it surfaced that airdrop hunters had pooled $3.3 million of tokens amassed from the former Arbitrum (ARB) airdrop from 1,496 wallets into just two wallets under their control.
Upon receipt of the tokens, airdrop squatters tend to cash in their aggregated rewards, which usually triggers an abrupt depreciation in the value of the newly airdropped token.
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Published At
5/2/2024 11:38:28 AM
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