LayerZero’s native token, ZRO, has witnessed a sharp price decline of 15% within the last 24 hours, with its current trading value standing at USD 2.869473 according to data from Coinmarketcap. This sudden downturn in the token’s price has correlated with a contentious update introduced by LayerZero’s founder, Bryan Pellegrino, relating to a unique token claiming mechanism.
The new claiming method, dubbed Proof-of-Donation, mandates users to contribute $0.10 in USDC, USDT, or ETH for each ZRO token they wish to claim. This measure is aimed at gathering an approximate $18.5 million to fund Ethereum developers. Despite Pellegrino’s intentions to support the Ethereum ecosystem and stabilize the token’s distribution, the crypto community has been split over the concept, leading to escalated volatility of the ZRO token.
On June 20, following the token’s launch on Binance, the price of ZRO soared by over 15% in a mere 30 minutes, briefly touching the $4.40 mark. However, the uplift was rapidly reversed as prices plummeted by 22%, indicating significant market fluctuations post-launch.
In response to the turmoil and confusion within its community, the LayerZero team released statements to clarify that the ZRO token launch was not to be considered an airdrop. The distinction was made to address concerns raised around community engagement, fair distribution, and overall protocol welfare.
Bryan Pellegrino also highlighted that participating in the Proof-of-Donation is entirely at the discretion of the users. He reassured the community that those who opposed the donation policy might choose not to claim their ZRO tokens.
Previously, the LayerZero team identified and flagged over 800,000 potentially fraudulent Sybil addresses and proposed an airdrop eligibility checker to combat airdrop farming—a prevalent issue where users create multiple accounts to unfairly claim token allocations.
Despite the divisive opinions on the Proof-of-Donation initiative, some proponents within the crypto sphere have shown support. They endorse the philosophy behind the donation, arguing that it would likely bolster the ecosystem and aid in thwarting Sybil attacks, ultimately contributing to a more secure and equitable token distribution.
The coming days are likely to shed more light on how the Proof-of-Donation mechanism will affect the ZRO token’s performance in the volatile crypto market, as well as the broader implications for LayerZero’s efforts in establishing a robust developer fund.
