Hongji Feng

Last updated:

June 12, 2024 03:05 EDT | 1 min read

ZKSync’s announcement of its ZK token launch saw its total value locked (TVL) to drop significantly due to debate over distribution.

According to DeFiLlama, the TVL has fallen to around $128 million after the company announced the details of its ZK token distribution. Early users expressed dissatisfaction, particularly about the allocation of tokens, which led to a decrease in confidence of the protocol.

ZKSync’s Token ZK to Launch on June 17

In its June 11 announcement, ZKSync revealed the ZK token would launch on June 17, distributing 17.5% of the total 21 billion supply to early users through a one-time airdrop. The allocation aimed to reward long-time supporters since the Mainnet development in 2023.

The token distribution plan detailed that 16.1% of the tokens would go to the team and 17.2% to investors. The rest would be allocated for eco initiatives and managed by the ZKSync Foundation and ZK Nation governance process.

Controversy arose over the perceived unfairness of the allocation. Many early users felt inadequately rewarded, citing the low cap on maximum allocation. Despite ZKSync clarifying that 89% of the 17.5% was for significant network transactions and 11% for developers and researchers, dissatisfaction persisted.

Backlash Against Distribution From Community

The announcement triggered a significant asset outflow from the protocol, reflected in the drop in TVL from nearly $200 million to the current $128 million, according to DeFiLlama. This decrease indicated a loss of confidence among users who felt marginalized by the distribution strategy.

“There are six reasons for not buying ZKSync tokens,” said X user @xqt1688. “The secondary investors have officially declared war on VCs and project owners. If we don’t buy, we won’t lose.”

The user stated that the project has been a copycat in an unstable market, and its “layer-2 narrative” has also been proven to be ineffective as TVL drops.

In response, ZKSync has stressed its commitment to transparency and community engagement, inviting further feedback to better align future decisions with user expectations.

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