Does air drop require donations? Perhaps we really misunderstood LayerZero

Author: Golem, Odaily Planet Daily

From the announcement of the airdrop snapshot by LayerZero in early May to the witch hunt, LayerZero has been in the spotlight for nearly two months, facing doubts, controversies, and disputes. After all this, the community thought they could finally claim their airdrop, but unexpectedly, LayerZero introduced a new Claim mechanism called "Proof of Donation," where users must donate $0.1 for each ZRO they wish to claim.

Some believe this is another difficulty imposed by LayerZero on the community, but is it really? The Proof of Donation mechanism introduced by LayerZero may be a positive improvement to the current airdrop model.

What’s Wrong with the Airdrop Model?

Undoubtedly, Uniswap truly opened the era of airdrops. Projects use airdrops to return some value to the community and users, which has become an important business model developed in Web3 over the past few years. Developing from genuine community and user support, and then returning the fruits of that development to the community and users, this positive feedback loop is actually beneficial for the growth of the crypto industry, attracting newcomers to this thriving market.

Initially, airdrop distribution of tokens was a win-win initiative for both projects and users, but it has now evolved into more and more contradictions. What exactly is wrong with the current airdrop model?

In a world where everyone is seeking profit, a one-way reward airdrop model is only suitable for the early stages of ecosystem development. As numerous projects and users flood into the ecosystem, this airdrop model lacks the ability to complete a healthy cycle within the ecosystem.

After four years of development, the one-way reward airdrop model has been thoroughly studied by players. Driven by greed and interests, a large number of inferior projects have emerged in the market, using task models to PUA users and greedy large witch armies to inflate project metrics, thereby achieving listings on major trading platforms. These inferior tokens contribute little to the industry's development and are gradually driving out the good tokens in the market, namely those projects and real users that truly innovate and contribute to the industry's growth.

What was originally a win-win airdrop model has now turned into a multi-party game. A project or track that inherently lacks substantial demand can use complex airdrop task models to attract traffic, grow users, and deceive investors with data; a group of large witches will also compete to contribute data to core projects for profit, vying for and diluting the dividends originally planned for real community users.

The result of this ongoing game will be a lose-lose situation. Inferior project parties attract a large amount of funds and users through airdrops, profiting immensely while ultimately failing to give the community the returns it deserves, while quality projects either lose attention or spend a lot of energy joining this game. The entry of hundreds or thousands of large witches will compete for and dilute the airdrop shares that belong to real users, who may only have one or a few accounts. To protect the rights of real users, project parties will inevitably exclude witches, but this process may also harm real users—despite the initial intention being just and reasonable; some project parties are even more extreme, preferring to mistakenly eliminate a thousand rather than let one escape, leading to community outrage and even conspiracy theories; while some project parties are overly cautious, trying to accommodate everyone, ultimately likely being blinded by witches.

A good business model should strive to avoid the phenomenon of bad money driving out good money and form a positive cycle. It is evident that the current airdrop model can no longer achieve this.

LayerZero Introduces a New Airdrop Model

In response to the drawbacks of the current airdrop model, LayerZero aims to make a change. In its blog, it stated: "Free token airdrops will not be beneficial for the long-term development of projects; the distribution of ZRO is not an airdrop."

LayerZero has introduced a new Claim mechanism called Proof of Donation. To claim ZRO, users must donate $0.1 in USDC, USDT, or native ETH for each ZRO, with this small donation going directly to Protocol Guild, a non-profit organization composed of core Ethereum researchers and developers. This new mechanism for claiming airdrops is expected to create a new ecological model.

From the perspective of ecological circulation, in the past one-way airdrop model, the completion of airdrop distribution signified an end, contributing nothing to the entire ecosystem, whereas now it becomes the beginning for other projects. Community supports project development—project growth leads to airdrop returns to the community—community donates part of the airdrop value to support ecological development—quality projects receive funding and can develop. This model will result in a healthy operation of the entire industry.

From the user perspective, donating to claim airdrops can effectively curb the development of witches, increasing their costs, which to some extent protects real users and prevents the airdrop value belonging to them from being excessively contested or diluted. At the same time, even if it cannot completely curb witches, it can, to some extent, encourage them to contribute to the development of the entire ecosystem.

From the perspective of other projects, in addition to helping quality projects that genuinely need funding, this model also provides a new way for other projects to attract traffic. For example, WOO X announced that depositing ZRO tokens would earn donation rebates, and Bitget announced that the first 10,000 users who recharge ZRO would receive their donation fees refunded, etc. This effectively pulls other projects into the positive cycle of the ecosystem.

However, despite the ideal being beautiful, LayerZero's execution in specific aspects is indeed not adequate, such as the projects being funded already being chosen collectively by the community. Nevertheless, these issues may be resolved and mature in the future; real users in an ecosystem will not refuse to do this, even if it’s just a small donation, while only witches will strongly oppose it, as it represents a cost to them.

How Different Parties View LayerZero's Actions

Judgments about a matter are always relative and subjective due to differing positions, but "benefit" is objectively real. How do various parties in the market view LayerZero's actions?

Developers generally express approval of LayerZero's actions. Berachain co-founder Smokey stated that the current airdrop model is inappropriate, rewarding users but should reward real users more; Pudgy Penguins security manager Beau noted that LayerZero makes everyone realize that there are greater things than profit, stating that if one does not want to pay donations, they should not claim. Of course, some developers have expressed skepticism, such as Yearn core developer banteg, who stated that LayerZero's forced donations resemble a beautified ICO.

From the user perspective, opinions on LayerZero's actions are mixed. However, on-chain data shows that many users still support LayerZero's actions. According to LayerZero CEO Bryan Pellegrino's post on the X platform, over 119,000 addresses claimed the airdrop just three hours after the Claim opened; due to the LayerZero token claims, Arbitrum's network revenue skyrocketed 166 times to $3.43 million yesterday, which indirectly indicates that user enthusiasm for claiming has not significantly diminished due to 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 to think and donate to a great cause. Even if each donation is only a few cents, everyone can benefit immensely from it.

Of course, the perspective from which one speaks influences their statements. Bryan Pellegrino supports users donating to the ecosystem from the project’s standpoint, but from the users' and market's perspective, not everyone may agree.

A good project should be inclusive of all users, whether witches or real users, as long as the balance between the number of witch addresses and real users is maintained, everyone can accept it. As a multi-account user, I have always maintained an attitude of "be grateful if there is an airdrop, and let it go if there isn't." For LayerZero's bold attempt, although I am a user, this time I choose to stand with LayerZero.