LayerZero, a protocol that enables interoperability between different blockchain networks, is getting ready to launch its highly anticipated airdrop for users. The first snapshot for the airdrop was completed on May 2, as stated in a post by LayerZero Labs. The post also mentioned that more information about the airdrop will be shared soon.
Airdrops are commonly used by decentralized finance (DeFi) protocols to attract more users by rewarding them with newly issued cryptocurrencies. LayerZero’s ZRO was the first Hyperp (Hyperliquid-only perp) to be launched on the HyperLiquid perpetual futures decentralized exchange (DEX) in September 2023.
According to Xulian, a pseudonymous core contributor of Hyperiquid, the trading of ZRO Hyperp at $8.3 could potentially result in a fully diluted valuation (FDV) of around $17 billion. Hyperps function similarly to perpetual futures contracts but do not require an underlying spot or index oracle price. Hyperliquid is currently the largest perpetual futures DEX in terms of trading volume and Open Interest.
Although LayerZero Labs did not provide any further details about the airdrop, it had previously hinted at a token launch in early 2024 in a post on December 7, 2023.
However, it’s worth noting that airdrops may not always benefit the DeFi protocols in the long run. While they aim to incentivize early adopters, a significant portion of the rewards often go to professional airdrop hunters or squatters. These individuals take advantage of the airdrops by farming them with multiple wallets, with no intention of actually using the protocol. They then sell the rewards on the market after claiming them.
In a recent incident, the identity of a person who forged identities to claim the StarkNet airdrop was captured by Chinese police on May 1. This person claimed over 40,000 STRK tokens on behalf of other users and converted them to around $91,000 worth of Tether (USDT).
Similar incidents have occurred in the past, where airdrop hunters consolidated millions of dollars worth of tokens from airdrops into just a few wallets that they controlled. This practice of selling the airdropped tokens immediately often leads to a significant decrease in their value.
In conclusion, LayerZero is gearing up for its upcoming airdrop, which is expected to attract users to its protocol. However, the effectiveness of airdrops in the long term is debatable, as they can be exploited by professional squatters.