On Thursday, interoperability protocol LayerZero conducted its token generation event, allowing users to claim their ZRO airdrop allocation for the first time.
LayerZero’s airdrop claims opened up at 7:00 a.m. EST, and since then, about 216,000 addresses have claimed over 33 million ZRO tokens worth about $121 million at current prices, according to data from a Dune Analytics dashboard created by CryptoKoryo Research. Of the 85 million total tokens earmarked for LayerZero’s airdrop, 61.11% of the entire airdrop allocation worth roughly $191 million remains to be claimed. The claim process comes with a unique twist as users must pay 10 cents for each token they want to claim.The price of ZRO started trading around $4.45 but has slid 17% to $3.66, giving it a $917 million market cap and a $3.66 billion fully diluted valuation, leading decentralized trading platform dYdX and yield tokenization protocol Pendle Finance, per CoinGecko.
“LayerZero is one of the most used and farmed protocols,” said the LayerZero Foundation, a nonprofit dedicated to the long-term sustainability of the interoperability protocol, in a blog post, adding that the initial token distribution was challenging as “nearly six million unique wallet addresses have interacted with the protocol.”
Read More: Has LayerZero Shot Itself in the Foot With Its Sybil Detection Program?
Users Face Long Waiting Times and Increased Gas Fees
As a result of the sheer number of addresses trying to claim their airdrop allocation, people not only have had their claiming process take several hours but also suffered increased gas fees to the point where LayerZero CEO and co-founder Bryan Pellegrino urged those with smaller claims to wait until activity dies down.
The LayerZero airdrop has driven substantial activity to Arbitrum, an Ethereum layer 2 blockchain network, to the point of “literal madness,” according to Pellegrino. “Things are insane and on fire [at the moment],” wrote Bryan Pellegrino on X.
“Every ZRO claim creates a transaction on @Arbitrum,” said Entropy Advisors, a governance firm focused on the layer 2 blockchain network, on X. “With over 165,000 claims so far in 2.5 hours, Arbitrum One usage surged to 140 [transactions per second].”
The increase in activity to Arbitrum has made the layer 2 “one of the biggest winners” from the airdrop, said Austin Marrazza, the product manager of Arbitrum software development firm Offchain Labs, adding that Arbitrum DAO “raked in $3 million in congestion from claiming traffic today.”
Read More: 8 Reasons Why LayerZero’s Upcoming Airdrop Could Be the Most Complex Ever
LayerZero has “caused an unprecedented surge in gwei, with fees reaching up to $33 for destination transactions. We never saw such high gas prices on [Arbitrum] in 2022,” said one crypto user on X who goes by “@Souravjoy7.”
Meanwhile, some users have experienced a serious lag in claiming their ZRO tokens. Several crypto users on X such as “@TobiWebIII” and “@uglygmi” shared how their claiming process took a long time. When one user asked Pellegrino for help in addressing their two-hour claiming process, Pellegrino said, “Nothing to do right now, [transaction] has to confirm on [Arbitrum] and come back and Arbitrum is under crazy stress.”
Proof-of-Donation Controversy
As LayerZero grapples with complaints of high gas fees and long wait times, it’s also dealing with another controversy surrounding its unique claims process.
Users must donate 10 cents for each ZRO token they want to claim.
“LayerZero is introducing a new claiming mechanism called Proof-of-Donation, which will result in ~$18.5 million donated to @ProtocolGuild, a collective funding mechanism for Ethereum developers,” the LayerZero Foundation stated in an X post.
Some, such as crypto analyst Adam Cochran, support LayerZero and Pellegrino’s decision to implement a way to fund the development of the Ethereum ecosystem through the airdrop, others have taken to social media to express their unsavory opinion. For example, Ethereum developer Lefteris Karapetsas said, “A forced donation is wrong. If you force a donation then it’s called a tax.”
While some claim the proof-of-donation mechanism is paternalistic in forcing people to donate, Pellegrino pushed back saying, “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.”
