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News/Zksync Token Debuts With Network Strain, Airdrop Controversy, and Sell-off

Zksync Token Debuts With Network Strain, Airdrop Controversy, and Sell-off

Van Thanh Le

Jun 19 2024

3 weeks ago3 minutes read

zkSync Token Launch

zkSync's token launch on June 17, 2024, marked a significant event in the cryptocurrency market, with initial listings on major exchanges like BinanceBybitGate.io, and KuCoin. Trading volumes for zkSync tokens were robust, with global trading volume reaching approximately $485.42 million on launch day. Significant activity was observed in South Korea, particularly with the token’s listing on Bithumb. 

The token initially peaked at $0.32 but soon experienced a decline, currently trading at around $0.22. This represents a drop from its initial peak price, reflecting early trading activity where the token value stands 30% below its initial price. The current market capitalization is approximately $809 million, with a total supply of 21 billion ZK tokens.

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Binance supported the trading with pairs like ZK/BTC, ZK/USDT, ZK/FDUSD, and ZK/TRY, and conducted a token giveaway, distributing 10.5 million ZK tokens to 52,500 users. To be eligible, users needed to have initiated at least 50 zkSync Era transactions between February 2023 and March 2024, spread across seven months, without claiming any ZK tokens through the official airdrop.

The network faced considerable technical challenges during the launch, particularly with remote procedure call (RPC) services, which are crucial for communication between nodes and for performing network operations such as sending transactions and querying data. High network load led to degraded performance in RPC services. The zkSync team responded by increasing RPC capacities and advising users to stay tuned for updates, highlighting their commitment to resolving these technical issues promptly.

Amid the excitement of the token launch, eligibility for the airdrop extended to 695,000 wallets. However, this event also saw a rise in scams, with malicious decentralized applications (DApps) impersonating zkSync using "drainer SDKs" to evade detection. Scammers even used Twitter's verified accounts to distribute links to these harmful DApps. Ido Ben-Natan, CEO of Blockaid, underscored the sophisticated nature of these security threats and the importance of vigilance within the community.

The token distribution program, running from June 17, 2024, to January 3, 2025, aims to distribute 3.675 billion ZK tokens to eligible users. ZK’s post-launch sell-off was notable, with approximately 73% of the top 10,000 addresses selling or transferring out their tokens, according to the latest data from Nansen. In total, 509 million ZK tokens were sold or transferred, with 4,041 addresses ("jeeters") liquidating their entire holdings, 3,264 addresses partially selling, and 2,695 addresses retaining their tokens.

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Source: Nansen

Despite the excitement, the community raised concerns about the methodology used to filter out Sybil farms. A significant controversy involved ZeroLend, a major lending protocol excluded from the airdrop despite meeting the eligibility criteria. According to the team, ZeroLend holds over 10% of zkSync’s total value locked (TVL) and dominates on-chain lending activity with an 81% share. 

zkSync clarified that 30% of ZeroLend users received significant allocations, but the community response was mixed, with some calling the project “a scam.”

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Source: X

The zkSync team defended their distribution strategy, suggesting that having more tokens in circulation could benefit genuine governance participants by increasing availability and market presence. Some investors are holding onto their ZK tokens in anticipation of potential price increases, drawing on historical data, though the future performance of ZK remains uncertain.

Conclusion

zkSync's token launch witnessed a rollercoaster ride. High trading volume initially fueled excitement, but network issues and community concerns regarding airdrop fairness cast a shadow. The zkSync team is actively addressing technical challenges and refining airdrop distribution. While the token's future trajectory remains uncertain, some investors remain cautiously optimistic, drawing on historical airdrop trends. Only time will tell if zkSync can overcome these hurdles and establish itself as a major player in the cryptocurrency space.

FAQs

1. What were the biggest challenges faced during the zkSync token launch?

The launch was marred by network congestion due to overloaded remote procedure call (RPC) services. Additionally, the community raised concerns about the airdrop distribution process, particularly regarding Sybil attack prevention and the exclusion of major DeFi protocols like ZeroLend.

2. How did zkSync respond to the technical issues and community concerns?

The zkSync team acknowledged the RPC issues and increased capacities to improve performance. They also committed to refining their airdrop filtering process to ensure a fairer distribution and address community concerns head-on.

3. What is the current state of the zkSync token?

The ZK token experienced a post-launch sell-off, with a significant portion of holders selling or transferring their tokens. Despite the initial price drop, some investors are holding onto their ZK tokens, hoping for future price increases based on historical airdrop trends.

This article has been refined and enhanced by ChatGPT.

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