Cross-chain interoperability protocol LayerZero’s newly launched token LayerZero (ZRO) has fallen 17% a day after its launch as its founder defende a controversial donation criterion for claiming tokens, which some have likened to a “tax.” 

Some people disagree and think the mechanism could be a right step to solving issues plaguing recent token airdrops. 

Upon its launch on June 20, ZRO surged 15.15% to $4.71 within just 20 minutes before tumbling 22% within two hours, a pattern often seen in token airdrops as claimants dump their newly acquired tokens. 

In this case, ZRO’s launch came with its own unique controversy. LayerZero has made it so users wanting to claim the tokens are required to donate a small amount of money per ZRO token.

Source: LayerZero Foundation

“To claim ZRO, users must donate $0.10 in USDC, USDT, or native ETH per ZRO. This small donation goes directly to the Protocol Guild,” LayerZero wrote in a June 20 X post.

LayerZero forecasted that the donations would result in approximately $18.5 million being donated to Protocol Guild, a collective funding mechanism for Ethereum (ETH) developers.

The move was met with a wave of backlash from the crypto community as users argued that having to pay a “tax” changes the nature of the “airdrop” to something more like an initial coin offering (ICO).

Users flocked to LayerZero’s post with comments including “Is this a joke” and “how about you pay for that.”

LayerZero reaffirms ZRO launch is “not an airdrop”

LayerZero has been adamant that the recent launch is “not an airdrop.” 

In a June 20 statement, LayerZero argued that airdrops no longer contribute to the “goals of equitable distribution, community building, and protocol health, which airdrops were initially introduced to solve.”

Mainly, this is due to token recipients with “little to no interest” in the project’s long-term success, due to an uptick in airdrop farming and Sybil entities, referring to entities that create and use a large number of wallets to farm an airdrop.

LayerZero co-founder Bryan Pellegrino has seemingly spent the day defending the token launch, reiterating that no one is entitled to the tokens and that if users don’t wish to donate, they should refrain from claiming them.

“There is no forced donation, if you don’t want to donate… simply don’t claim. This is not something you own, it’s something being offered,” he said.

ZRO briefly hit a high of $4.7 before tumbling below $3.50. Source: CoinMarketCap

“Such an unreal day, as exhausted as I’ve ever been in my entire life. Going to sleep for an unknown amount of time with notifications off. Godspeed all,” Pellegrino added.

Related: Tensions in DeFi industry exposed by LayerZero’s anti-Sybil strategy

Meanwhile, some members of the crypto community agree the ZRO’s donation claiming mechanism could be a step in the right direction for future airdrops. 

“People whining about the donation on LayerZero airdrop are dumb,” Adam Cochran claimed in a June 20 X post, explaining that the donation is being used to support a “greater ecosystem” and a “good way to set a base cost value for a token.”

”It’s a good way to add to the cost of sybil operations, making them less likely to sybil in the future,” he explained.

Last week, ZkSync noted that during its June 17 airdrop launch, a few Sybil wallets were able to bypass the system, despite using an “explicit” Sybil detection in addition to a “unique airdrop design” to ensure the highest number of organic users.

“While people are shitting on the ZRO airdrop, I wanna give credit where it’s due the claim page UI/UX is extremely clean and it’s by far the smoothest I’ve seen yet. it’s just like Spotify Wrapped,” Irys developer Connor King added.

ZRO is currently trading for $3.35, down 17% over the last 24 hours, according to CoinMarketCap data

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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

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