Crypto: LayerZero's ZRO Token Launch Causes Turmoil Among Polymarket Bettors (2024)

The unusual token distribution process of LayerZero Labs’ ZRO, requiring a donation to access, has confused Polymarket bettors. Crypto users are currently disputing a $680,000 bet and questioning the true nature of this launch.

A $680,000 bet at the heart of the controversy

LayerZero Labs surprised the crypto community by unveiling a new mechanism to distribute 85 million ZRO tokens, named “Proof-of-Donation”.

Indeed, to obtain ZRO, eligible claimants must make a donation of $0.10 per token to Protocol Guild, a non-profit collective of top Ethereum researchers and developers.

This approach breaks with the usual “airdropping” practices, which involve distributing tokens for free to generate interest and encourage adoption. LayerZero justifies this choice by arguing that traditional “airdrops” do not foster community building or long-term protocol health.

The project insists that it deliberately avoided the term “airdrop” in its communication to mark this difference. However, this semantic distinction is central to the current controversy stirring Polymarket.

The Polymarket community divided

On Polymarket, a decentralized betting platform, users had massively bet on the realization of a “ZRO airdrop” before June 30, with a total pot of $680,000.

But LayerZero’s unusual launch cast doubt, causing the “Yes” odds to plummet to 54% just before the bet concluded. Many bettors are now disputing the final outcome in favor of “Yes”.

Users have referred the UMA protocol, Polymarket’s partner in charge of resolving disputes, to determine the truth of the outcome. Its “decentralized truth machine,” which relies on UMA token holders’ voting, must decide the true nature of the ZRO launch. However, some Polymarket users fear a manipulated process and cry foul.

The debate is raging on Polymarket’s Discord server. For some, LayerZero does not have the authority to unilaterally redefine what an “airdrop” is.

Others recall that during a previous dispute involving Lens Protocol, token sales were explicitly excluded from the definition of an “airdrop”. However, a recent “rules update” from Polymarket calls for considering the broader context of the ZRO distribution to make a decision.

In summary, resolving this bet will have significant implications, not only for Polymarket bettors but also for the collective understanding of token distribution mechanisms in the crypto ecosystem.

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