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LayerZero ZRO Token Sees 16% Drop Amid Donation Controversy
An omnichain interoperability protocol, LayerZero’s ZRO token, suffered a 16% drop in value within a day of its launch due to a controversial decision by its founder regarding the token claims process, which critics compared to a “tax”.
The controversy stems from the LayerZero requirement for users to donate a small amount was requested, equivalent to $0.10 in native USDC, USDT, or ETH, per ZRO token. This donation goes directly to the Protocol Guild, a collective fund for Ethereum developers.
LayerZero Chart | Source: CoinmarketCap
While LayerZero defended this move as a way to support development, many in the crypto community viewed it negatively, arguing that it turned token distribution into something akin to an initial coin offering (ICO).
Despite the backlash, LayerZero maintains that ZRO’s launch is not an airdrop. They argued that traditional airdrops no longer served the purpose of equitable distribution and community building due to the rise of airdrop farming and Sybil entities.
Bryan Pellegrino, co-founder of LayerZero, reiterated that requesting ZRO tokens is optional and that those who do not agree with the donation criteria can choose not to participate.
The launch saw a 15% increase followed by a rapid decline in the value of ZRO, a common pattern in token launches where claimants quickly sell their tokens.
However, some members of the crypto community have supported LayerZero’s approach, believing that the donation mechanism could discourage Sybil’s operations and contribute to a healthier ecosystem.
Positive user experience comments noted for ZRO’s application process, compared to Spotify Wrapped, but token value dropped 15% to $3.35 in 24 hours, according to CoinMarktCap data.
The LayerZero token launch debate reflects ongoing discussions within the crypto community regarding equitable distribution, community involvement, and the evolving nature of token airdrops.