How will unclaimed LayerZero tokens be redistributed to active users?

Author: TPan Source: substack Translation: Shan Ouba, Golden Finance

Last week, I saw a post from LayerZero announcing that unclaimed tokens from their first airdrop would be redistributed to eligible wallets. As a lucky recipient of the first airdrop a few months ago, I wondered... would I be the lucky redistribution recipient?

But there was one keyword that caught my attention:

What is LayerZero? How is their TGE going?

LayerZero is a cross-chain protocol that allows different blockchains to interact and communicate with each other. Some applications of the protocol:

• Stargate: Allows users to bridge tokens across different blockchains, which has historically been a painful and complicated process

• OFT (Omnichain Fungible Token) Standard: A smart contract that allows tokens to be created and tracked on different blockchains. Recently, BitGo adopted the OFT standard, allowing WBTC (Wrapped Bitcoin) to be used on more than 80 blockchains.

• ONFT (All-Chain Non-Fungible Token) Standard: Similar to the OFT standard, NFTs can also cross-chain, and Pudgy Penguins is an early adopter of this feature.

LayerZero conducted their TGE event on June 20th after a long anti-sybil attack campaign (including self-reporting and bounty hunting activities, which is a topic for another day).

The LayerZero token (ZRO) supply is 1 billion, broken down as follows:

• 38.3% allocated to the LayerZero community, including allocations to users, developers, and community members

• 32.2% allocated to strategic partners with a 3-year unlock period, including investors and advisors

• 25.5% allocated to core contributors with a 3-year vesting period, including existing and future team members

• 4.0% token buyback, a commitment to give back to the community

Of the 38.3% community reserve, 8.5% (85 million) of the supply was allocated to the TGE event, with a 90-day claim window on September 20

Second reallocated claim

After the initial claim period ended, LayerZero opened the reallocation claims. How does it work?

Redistribution Eligibility

• Ineligible: Wallets that have claimed ZRO but have no qualifying transactions after the TGE

• Eligible: Wallets that have claimed ZRO at least once after the TGE and have used LayerZero

Allocation to Eligible Wallets

• Eligible wallets will receive a share of ZRO based on their original claim ratio in the TGE

• After the TGE, tokens that would have gone to wallets with zero transaction volume (i.e. ineligible wallets) will be reallocated to eligible wallets based on the amount of gas each user has spent since the TGE

30 Any tokens not claimed after the day will go to the LayerZero Foundation, which I assume will be redistributed to the community for future incentives.

Essentially, the second proposition has two parts:

Why is this interesting?

For many projects and ecosystems, the battle for user attention and retention has expanded to other areas. How do you encourage users to continue using your product and stay in your ecosystem when there are a million other shiny things to use on the market? Incentives are key, but carefully allocating them is key, and I think LayerZero has done a relatively good job of this.

The second claim was far less publicized than the first, which users may have spent months or even years claiming. In addition, this claim was a reallocation of the initial allocation, allowing the unclaimed portion to be re-purposed for active communities.

This is like robbing Peter to pay Paul, but Peter has been notified multiple times and has 90 days to file a claim, but has not been seen.

So far, an additional ~5 million ZRO out of the 85 million airdrop has been claimed, with a few weeks left.

This concept exists in many forms outside of the cryptocurrency space:

• In multiplayer strategy games like Clash of Clans, players can raid other bases and take their unclaimed resources. If you don't gather resources in a timely manner, you will eventually be raided and your resources will be "reallocated."

• Some class action settlements distribute the total settlement amount through an equal distribution: the settlement funds are divided equally among valid claimants. If you do not file a claim, you will not receive a share of the settlement.

• Proceeds from lottery programs support public causes such as education and health care. In some jurisdictions, unclaimed prize money also supports these causes.

In the above examples and LayerZero’s claims, reallocation is often a reward rather than a penalty. With claim windows lasting months, losing resources is more of a minor impediment than a substantial obstacle for Clash of Clans.

I wouldn’t be surprised to see the concept of reallocation used creatively in various on-chain incentive, engagement, and loyalty programs in the future.

With smart contracts, this could be applied in more interesting ways than what we see today.