TrendX Research Institute: LayerZero airdrop sparked controversy, has the end of the road come?

After more than a month of witch-cleansing activities, the LayerZero Foundation announced today on the X platform that the airdrop qualification query page has been launched. However, the results of the airdrop have broken the defense of many users.

As one of the most anticipated potential airdrop projects in the community, LayerZeros airdrop was once highly anticipated, and people were looking forward to a big airdrop. However, as the witch cleansing activities unfolded, a large number of studios and even ordinary users accounts were reported as witch accounts, and in the end, after working hard for more than half a year, they found that they had gained nothing.

As one of the only two large-scale airdrop projects that have received the same attention as Zksync recently, LayerZero has caused quite a bit of controversy this time. While users have questioned the sincerity of the project, they have also raised questions about whether a new token distribution paradigm will emerge in the current industry.

Before we get into that, we need to first understand what a witch cleansing is.

Month-long witch purge

LayerZero was founded in November 2021, during the bull market of the blockchain market. With strong capital support and promotion by key opinion leaders in the industry, LayerZero has risen rapidly within a year. The announcement of plans to launch a governance token airdrop has attracted great attention within the community. The strong capital background, high project valuation and top status have made many people look forward to lucrative airdrops, which has attracted a large number of airdrop hunters. According to Dune data, the number of interactions on the LayerZero chain has increased significantly since April last year, with more than 200,000 transactions per day and a maximum of 490,000 transactions. Such high-frequency interactions not only improve the platforms data performance, but also bring considerable revenue. For example, the first cross-chain DApp Stargate on LayerZero has a monthly revenue of more than 1 million US dollars, and this is just one product in its ecosystem.

With such high expectations, the community has always had high expectations for LayerZeros airdrop. Although there have been frequent reports of airdrops, they have been postponed. Finally, on May 2 this year, LayerZero announced on the X platform that the first snapshot had been completed, and market sentiment reached its peak.

According to WOO X Research, the value of LayerZeros airdrop could be between $600 million and $1 billion. Conservatively, if the TGE valuation is 4 times and the initial circulation is 15%, the FDV is $12 billion, the airdrop value is about $600 million, and each user is expected to receive $750 to $1,500. In an optimistic estimate, if the circulation is 20%, the TGE valuation is 4.5 times, the FDV is $13.5 billion, the total airdrop value is expected to reach $1.08 billion, and each user is expected to receive $1,350 to $2,700.

However, just as users were looking forward to the airdrop, LayerZero suddenly announced an unexpected news. On May 3, LayerZero announced that in order to ensure the fairness of the airdrop, a one-month Sybil review operation would be carried out.

It is not uncommon to conduct Sybil reviews in airdrops. Sybils usually refer to the act of making meaningless or small transactions through a large number of accounts to obtain airdrops. However, this review introduced a brand new bounty reporting mechanism. According to the official announcement, the review will be divided into three stages. The first stage is a 14-day self-exposure stage, where users can self-expose their Sybil behavior, and the official will retain 15% of the airdrop allocation for such accounts; the second stage is the official review stage, where LayerZero will screen according to specific rules, and the Sybil accounts found will not retain any airdrop quota. The most controversial is the third stage - the bounty reporting stage. From May 18 to May 31, anyone can submit a report on Github. The successful reporter will receive 10% of the airdrop allocation of the reported person, and the remaining 90% will return to the airdrop pool, and the reported person will no longer receive any airdrop.

Finally, as Bryan Pellegrino, CEO of LayerZero Labs, said on X today, there are 1.28 million eligible addresses; and about 10 million recovered tokens will be returned to real users. The witch review has come to an end. 803,000 addresses have been identified as potential witches, of which more than 338,000 addresses have revealed themselves as witches.

The “rat trading” controversy and 3U ’s off-market price

When the Sybil review was over and users were eagerly looking forward to the airdrop, LayerZero was caught up in a rat trading scandal. While most users were dissatisfied and ridiculed by the results of the airdrop, some users still said that they had received a large number of ZRO tokens. Most of these lucky people held Kanpai Pandas NFTs. For example, an address with 50 Kanpai Pandas NFTs received 5335.55 ZRO tokens, while another address starting with 0x816 received 10,000 ZRO tokens for holding 152 NFTs. On average, each NFT received about 100 ZROs, and it was adjusted according to the rarity of the NFT.

Since the Kanpai Pandas project is not widely known, this has aroused users suspicion of rat trading. However, according to nftgo data, there is no obvious correlation between the peak trading volume of Kanpai Pandas and the time of the LayerZero airdrop snapshot, and the official Twitter has been operating normally. Therefore, the accusation of rat trading in Kanpai Pandas has not been confirmed.

At the same time, many users said that they invested a lot of manpower and energy, spent hundreds of dollars, but might only get 25 ZRO tokens. According to the over-the-counter price of $3 per token, this is far from enough to cover the cost. These users believe that LayerZeros airdrop is insincere.

Axel Bitblaze, an X user who holds 36 Kanpai Pandas NFTs (about 36 E), received an airdrop of 10,000 LayerZero (ZRO). He wrote that the airdrop share given by LayerZero to on-chain users was disappointing: The top 1% of wallets only received 200-500 tokens, which is crazy... My family and I also worked hard to interact to get the airdrop share, and although we ranked in the top 1%, these interactions only resulted in a small airdrop.

Some users even believe that the end of the Zksync and LayerZero airdrops will become the airdrop EndGame.

It’s not just the ZRO airdrop. The recent ZK airdrop has also caused similar controversy. The number of qualified addresses is far lower than expected, the decision-making process is not transparent, Nansen is disassociated, and there are frequent suspicious addresses, but the official has not made a direct response. This series of operations has caused the ZK airdrop to fall into a rat trading storm. Previously, AltLayer was also questioned by the community for rat trading because of OG NFT.

The root of the problem lies in the communitys dissatisfaction with the airdrop allocation. Retail investors are unable to determine how to meet the official airdrop standards, and the official final interpretation right only increases the suspicion of opaque operations, resulting in airdrop tokens being allocated to rats. These rats sell tokens, retail investors take over, and the remaining token supply continues to be unlocked to continue to suppress the market.

In comparison, the airdrop of Uniswap, the earliest representative wall of airdrops, appears to be more transparent and fair. Uniswap officials said that as long as you have used Uniswap, regardless of whether the exchange is successful or not, everyone can receive 400 UNI airdrops. At the same time, holding UNI can also get a series of benefits such as SOCKS tokens.

Although this kind of airdrop with no threshold has been criticized, in an era when airdrop projects are criticized for counter-attacking and taking over, UNI appears to be a successful airdrop case.

Some people believe that the real reason why the ZRO airdrop caused strong dissatisfaction is that these airdrop project parties broke the balance between VCs, project parties and fleecing users.

Mao users or studios are the weakest party in the game of VC pushing up valuations and spending money crazily. Project parties need user interaction data to attract VC investment, and VCs need project parties to issue tokens to cash out. Project parties use the promise of tokens that may become tokens in the future to attract Mao users to work for their data growth for free. But at the same time, there are also views that whales should not get all tokens just because they invest a lot of capital, but the smallest users should get some basic number of tokens anyway.

This is also the origin of the widespread anti-institutional sentiment in the current Web3 field. Because of VC’s greed or investment misjudgment, these projects have received super-high valuations, but cannot form a reliable and stable business model. They can only rely on issuing tokens to get retail investors to pay for their indigestible assets.

But although the two airdrops of ZK and LayerZero were surprising, for ordinary users, coin-mining is still a way to earn profits, although the profits are continuing to decline.

Airdrops worth noting after LayerZero

Manta Network: Manta token is an OFT token. The team deploys OFT Manta Token on different chains and supports cross-chain Manta tokens between multiple chains.

Distribution plan: 10% to developers; 30% to early adopters; 20% to ecosystem partners; 40% to LP providers.

Project link: https://app.trendx.tech/project/Manta%20Network/1d507e4c

Canto: Canto is a Layer 1 blockchain built using the Cosmos SDK. Through LayerZeros OFT standard, CANTOs cross-chain representation is deployed to Ethereum, enabling users to provide liquidity and trade CANTO on the mainnet, thereby also providing an additional bridge path for Canto.

Distribution plan: 70% is allocated to CANTO OFT cross-chain users, with a total of at least 50 CANTOs cross-chain to/from Ethereum, of which 20% is distributed evenly and 80% is distributed according to the cross-chain volume ratio; 20% is allocated to CANTO/WETH LP on PancakeSwap (Ethereum), according to the ownership percentage ratio of the liquidity pool at the time of the snapshot; 10% is allocated to Canto developers.

Project link: https://app.trendx.tech/project/Canto/57fcc700

DappRadar: DappRadar is a DApp data analysis platform.

Distribution plan: 10% to developers; 90% to RADAR stakers.

Project link: https://app.trendx.tech/project/DappRadar/a09d08a0

KelpDAO: KelpDAO is a liquidity re-staking protocol, whose rsETH uses OFT to cross-chain to other L2.

Distribution plan: 40% is allocated to users who cross-chain to various L2s; 20% is allocated to users who natively mint rsETH on L2; 20% is allocated to the top 500 liquidity providers on the mainnet and L2; 10% is allocated to rsETH holders on the mainnet; 10% is allocated to Kelps core team to pay for developer fees and audits.

Project link: https://app.trendx.tech/project/KelpDAO/73360fcf

Pendle: Pendle is a yield trading protocol.

Distribution plan: 10% to developers; 90% to vependle holders.

Project link: https://app.trendx.tech/project/Pendle/3d 1 e 2 ed 8

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