ZKSync Total Value Locked Decreases Amidst Debate Surrounding ZK Token Distribution

ZKSync Experiences Drop in TVL Following Controversy Surrounding ZK Token Distribution


By Hongji Feng
Updated on:
June 12, 2024 03:04 EDT
|
1 min read


After ZKSync announced the launch of its ZK token, its total value locked (TVL) took a hit amidst debates over distribution.
As reported by
DeFiLlama
, the TVL plummeted to approximately $128 million following the release of details regarding the ZK token distribution. Early adopters voiced their discontent, particularly regarding the token allocation, leading to a decline in trust in the protocol.
ZKSync’s ZK Token Set to Launch on June 17
In a statement on June 11, ZKSync unveiled that the
ZK token
would be introduced on June 17, with 17.5% of the total supply of 21 billion being distributed to early adopters through a one-time airdrop. The distribution aimed 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, 17.2% to investors, and the remaining portion designated for ecosystem projects overseen by the ZKSync Foundation and ZK Nation governance process.
Controversy stemmed from the perceived inequity in the allocation. Many early adopters felt undervalued, citing the limited maximum allocation cap. Despite ZKSync clarifying that 89% of the 17.5% was for significant network transactions and 11% for developers and researchers, dissatisfaction persisted.
Community Backlash Against Distribution
The announcement sparked a notable outflow of assets from the protocol, resulting in the TVL dropping from nearly $200 million to the current $128 million, according to DeFiLlama. This decline indicated a loss of confidence among users who felt overlooked by the distribution strategy.
X user @xqt1688
expressed, “There are six reasons for not purchasing ZKSync tokens. Secondary investors have officially declared war on VCs and project owners. If we abstain from buying, we won’t suffer any losses.”
The user pointed out that the project was a copycat in an unstable market, and its “layer-2 narrative” had proven to be ineffective as TVL decreased.
In response, ZKSync reiterated its dedication to transparency and community involvement, encouraging additional feedback to better align future decisions with user expectations.
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