Is LayerZero Really to Blame for the Need to Raise Funds for Airdrop in Airspace

Original | Odaily Planet Daily
Author | Golem


From LayerZero’s announcement of the airdrop snapshot in early May to the witch hunt, LayerZero has been in the spotlight, facing doubts, controversies, and disputes for nearly two months. After going through all of this, the community thought they could finally relax and claim their airdrops, but LayerZero has come up with a new “proof of donation” mechanism, where users must donate $0.1 USD for each ZRO they want to claim.
Some people think that this is LayerZero’s way of challenging the community once again, but is it really so? The introduction of the proof of donation mechanism by LayerZero may actually be a beneficial improvement to the current airdrop model.
What went wrong with the airdrop model?
There is no doubt that Uniswap truly ushered in the era of airdrops. Projects give back a portion of their value to the community and users through airdrops, which has become an important business model in the Web3 ecosystem. It starts with the support of the community and users, and then returns the fruits of development to them. This positive feedback loop actually benefits the development of the crypto industry, attracting newcomers to this thriving market.
Airdropping tokens was initially a win-win move for projects and users, but it has now evolved into more and more conflicts. What exactly went wrong with the current airdrop model?
In a world driven by profit, one-way reward airdrops are only suitable for the early stages of ecosystem development. As more projects and users enter the ecosystem, this airdrop model lacks the ability to sustain a healthy cycle.
After four years of development, the one-way reward airdrop model has been thoroughly studied by players. Driven by greed and self-interest, a large number of low-quality projects have emerged in the market, using task-based models to manipulate users and greedy witch armies to inflate their project’s metrics and get listed on major exchanges. These low-quality projects not only contribute little to industry development, but they are also gradually pushing out the good projects and genuine users from the market.
The originally win-win airdrop model has now turned into a multi-party game. A project with no significant volume or even pseudo-demand can use complex airdrop tasks to attract users, grow their user base, and manipulate data to deceive investors. A group of witches will also compete for and dilute the airdrop rewards that should be given to genuine community users in order to gain benefits.
The result of this ongoing game is a lose-lose situation. Low-quality projects use airdrops to attract a large amount of funds and users, but ultimately fail to give back to the community what they deserve. Meanwhile, high-quality projects either lose attention or have to spend a lot of effort to participate in this game. The involvement of hundreds or thousands of witches will compete for and dilute the airdrop shares that belong to genuine but only one or a few users. In order to protect the rights and interests of genuine users, project teams inevitably have to exclude witches, but in this process, they may also accidentally harm genuine users, even if their intentions are just and reasonable. Some project teams are more extreme and would rather kill a thousand to prevent one from escaping, which can lead to community outrage and even conspiracy theories. Some project teams are more cautious, trying to take care of everyone, but they are most likely to be deceived by witches.
A good business model should try to avoid the situation where bad money drives out good money and create a virtuous cycle. Obviously, the current airdrop model is unable to achieve this.
LayerZero introduces a new airdrop model
In the face of the shortcomings of the current airdrop model, LayerZero wants to make a change. In their blog post, they stated, “Free token airdrops do not benefit the long-term development of a project. The distribution of ZRO is not an airdrop.”
LayerZero has introduced a new claim mechanism called “proof of donation.” In order to claim ZRO, users must donate $0.1 USD worth of USDC, USDT, or native ETH for each ZRO, and this small donation goes directly to a non-profit organization called Protocol Guild, composed of Ethereum core researchers and developers.
This new mechanism for claiming airdrops actually has the potential to create a new ecosystem model.
From an ecosystem perspective, in the past one-way airdrop model, the airdrop distribution marked the end with no contribution to the overall ecosystem. But now, it becomes the beginning for other projects. The community supports project development, and the project gives back to the community through airdrops. The community then donates a portion of the airdrop value to support ecosystem development, allowing high-quality projects to receive funding and develop. This model results in the entire industry operating in a positive manner.
From a user perspective, claiming airdrops through donations can effectively curb the development of witches and increase their costs. This, to some extent, protects genuine users and prevents the value of airdrops meant for them from being excessively contested or diluted. Even if it can’t completely stop witches, it can encourage them to contribute to the overall ecosystem development to some extent.
From the perspective of other projects, besides helping high-quality projects that genuinely need funding, the introduction of this model also provides new ways for other projects to attract users. For example, WOO X announced that users who deposit ZRO can receive donation rebates, and Bitget announced that the first 10,000 users to deposit ZRO will have their donation fees refunded. This effectively brings other projects into the virtuous ecosystem cycle.
However, despite the good intentions, LayerZero’s execution in specific aspects may not be appropriate, such as the selection of projects to support, which should involve the participation of the community. But these issues may be resolved and developed in the future. A genuine user will not refuse to do this, even if they only donate a small amount, while only witches will strongly oppose it because it costs them.
How do different parties view LayerZero’s actions?
The judgment of a thing is always subjective due to different perspectives, but “profit” is objectively real. How do different parties in the market view LayerZero’s actions?
Developers generally approve of LayerZero’s actions. Smokey, co-founder of Berachain, wrote that the current airdrop model is inappropriate and should reward real users more. Beau, the security manager of Pudgy Penguins, stated that LayerZero makes everyone realize that there is something bigger than profit, and if you don’t want to donate, then don’t claim. Of course, there are also developers who express doubts, such as banteg, a core developer at Yearn, who claimed that LayerZero’s mandatory donation is like a beautified ICO.
From a user perspective, opinions on LayerZero’s actions vary. However, from the on-chain perspective, there are still many users supporting LayerZero’s actions. According to LayerZero CEO Bryan Pellegrino’s post on X platform, over 119,000 addresses claimed the airdrop within just over three hours of the claim opening. Due to the ZRO token claim, Arbitrum’s network revenue skyrocketed 166 times to $3.43 million yesterday, which indirectly indicates that users’ enthusiasm for claiming the airdrop has not diminished much despite the donation requirement.
Conclusion
Bryan Pellegrino once said that the purpose of the proof of donation is to make the community pause for two seconds and donate to a great cause, even if each donation is only a few cents, everyone will benefit greatly from it.
Of course, depending on the standpoint, Bryan Pellegrino supports users donating to the ecosystem from the perspective of the project team, but users and the market may not necessarily agree. A good project should be inclusive of all users, whether they are witches or genuine users. As a multi-claim enthusiast, the author has always maintained an attitude of gratitude for airdrops when they exist and acceptance when they don’t. For LayerZero’s bold attempt, although I am a claimer, this time I choose to stand with LayerZero.