Are Donations Still Needed for Airspace Recovery Maybe Weve Wrongly Blamed LayerZero

Original | Odaily Planet Daily
Author | Golem


From LayerZero’s announcement of the airdrop snapshot in early May to the witch hunt, LayerZero has always been in the spotlight, facing doubts, controversies, and disputes for nearly two months. After experiencing all of this, the community thought they could finally claim the airdrop peacefully, but LayerZero introduced a new “Proof-of-Donation” claiming mechanism, where users must donate $0.1 USD for every ZRO they want to claim.
Some believe that this is LayerZero’s way of challenging the community once again, but is that really the case? LayerZero’s introduction of the Proof-of-Donation mechanism may actually be a beneficial improvement to the current airdrop model.
What went wrong with the airdrop model?
Uniswap undoubtedly ushered in the era of airdrops. Projects distribute a portion of their tokens 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 benefits to them, creating positive feedback that promotes the development of the crypto industry and attracts newcomers to this thriving market.
Initially, airdrops were a win-win initiative for projects and users. However, it has evolved into more conflicts. So, what exactly went wrong with the current airdrop model?
In a world driven by profits, the one-way reward airdrop model is only suitable for the early stages of ecosystem development. As more projects and users enter the ecosystem, this model lacks the ability to sustain a healthy cycle.
After four years of development, players have already figured out the one-way reward airdrop model. Driven by greed and interests, the market has seen a surge of low-quality projects that exploit task-based user acquisition (PUA) and greedy witch armies to artificially increase their trading volume and get listed on major exchanges. These low-quality projects not only contribute little to the industry’s development but also gradually push out the good projects and genuine users from the market.
The once-win-win airdrop model has now turned into a multi-party game. Projects that do not have a large user base or even genuine demand can use complex airdrop tasks to attract users, manipulate user growth and data, and deceive investors. A group of witches will also contribute data to the core projects in order to gain profits, competing and diluting the airdrop rewards that should have been given to genuine community users.
The result of this game is a lose-lose situation. Low-quality projects exploit airdrops to attract funds and users without giving back to the community as they should, while high-quality projects either lose attention or need to invest a significant amount 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 a few users. In order to protect the rights of genuine users, project teams inevitably engage in witch hunts, but this process may also mistakenly harm genuine users, even if their intentions are just and reasonable. Some project teams are more extreme, willing to kill a thousand to not let one go, which can lead to community outrage and even conspiracy theories. Some project teams are cautious and try to take care of everyone, but they are likely to be deceived by the witches.
A good business model should avoid the phenomenon of bad money driving out good money and create a virtuous cycle. Obviously, the current airdrop model cannot 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, they wrote: “Free token airdrops do not contribute to the long-term development of projects. The distribution of ZRO is not an airdrop.”
LayerZero has introduced a new claiming mechanism called Proof-of-Donation. To claim ZRO, users must donate $0.1 USD worth of USDC, USDT, or native ETH for every ZRO they want to claim. This small donation goes directly to Protocol Guild, a non-profit organization consisting of Ethereum core researchers and developers.
This new claiming mechanism for airdrops actually has the potential to create a new ecosystem model.
From an ecological perspective, the past one-way airdrop model ended with the distribution of airdrops, without contributing anything to the overall ecosystem. But now, it becomes the beginning of other projects. The community supports project development, projects give back to the community through airdrops, the community donates a portion of the airdrop value to support ecosystem development, and high-quality projects receive funding to develop. This model leads to the healthy operation of the entire industry.
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 excessive competition or dilution of the value of airdrops that belong to them. Even if it cannot completely stop the witches, it can encourage them to contribute to the overall ecosystem development.
From the perspective of other projects, in addition to helping high-quality projects that genuinely need funding, this model also provides new ways for other projects to attract users. For example, WOO X announced that users can receive donation rebates by depositing ZRO, and Bitget announced that the first 10,000 users to deposit ZRO will receive a refund of donation fees. This effectively brings other projects into the virtuous cycle of the ecosystem.
However, despite the good intentions, LayerZero’s execution in certain aspects may not be appropriate, such as the selection of projects to support, which should involve the participation of the community. Nevertheless, these issues may be resolved and matured in the future. A genuine user will not refuse to do such a thing, even if they only donate a small amount, while only witches will strongly oppose it because it is a cost for them.
How do various parties view LayerZero’s actions?
Judging something is always subjective to some extent due to different perspectives, but “benefit” is an objective reality. How do various 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, Security Manager of Pudgy Penguins, stated that LayerZero makes everyone realize that there is something bigger than just making a profit. 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 of Yearn, who called LayerZero’s forced donation a “beautified ICO.”
From a user perspective, opinions on LayerZero’s actions are mixed. However, from on-chain data, there are still many users who support LayerZero’s actions. According to LayerZero CEO Bryan Pellegrino’s post on the X platform, more than 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 shows that users’ enthusiasm for claiming has not diminished much despite the donation requirement.
In 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 can benefit greatly from it.
Of course, depending on one’s position and perspective, opinions on LayerZero’s actions may vary. Bryan Pellegrino supports users donating to the ecosystem from the project’s standpoint, 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-airdrop participant, the author has always maintained an attitude of “grateful if there is, accepting if there isn’t” towards airdrops. For LayerZero’s bold attempt, even as a participant, this time I choose to stand with LayerZero.