ZKSync Total Value Locked Declines Amid Dispute Regarding ZK Token Allocation

ZKSync Total Value Locked (TVL) Decreases Amidst Controversy Surrounding ZK Token Distribution


Authored by Hongji Feng
Updated on:
June 12, 2024 03:04 EDT
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1 min read


After the announcement of the launch of the ZK token by ZKSync, there was a noticeable decrease in the total value locked (TVL) as debates arose regarding the distribution of the tokens.
As reported by DeFiLlama, the TVL dropped to approximately $128 million following the release of details regarding the ZK token distribution. Early adopters expressed discontent, particularly concerning the distribution of tokens, leading to a decline in confidence in the protocol.
ZKSync’s ZK Token Set to Launch on June 17
On June 11, ZKSync unveiled that the ZK token would be launched on June 17, with 17.5% of the total supply of 21 billion tokens being distributed to early users through a one-time airdrop. This allocation was intended to reward loyal supporters since the inception of the Mainnet in 2023.
The token distribution plan outlined that 16.1% of the tokens would be allocated to the team, with 17.2% going to investors. The remaining tokens would be directed towards ecosystem initiatives and managed by the ZKSync Foundation and the ZK Nation governance process.
Controversy erupted over the perceived inequality in the distribution. Many early users felt that they were not adequately compensated, citing the low cap on maximum allocation. Despite ZKSync’s clarification that 89% of the 17.5% was reserved for significant network transactions and 11% for developers and researchers, dissatisfaction persisted.
Community Backlash Against Distribution
The announcement sparked a significant outflow of assets from the protocol, resulting in the decline of TVL from nearly $200 million to the current $128 million, as reported by DeFiLlama. This decrease signaled a loss of trust among users who felt marginalized by the distribution strategy.
One user, @xqt1688, stated, “There are six reasons for not purchasing ZKSync tokens. Secondary investors have declared war on VCs and project owners. If we abstain from buying, we won’t suffer any losses.”
The user highlighted that the project was a mimic in an unstable market, and its “layer-2 narrative” had proven to be ineffective as TVL decreased.
In response, ZKSync reiterated its commitment to transparency and community involvement, welcoming further feedback to better align future decisions with user expectations.
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