The recently launched ZRO token has experienced significant volatility, plunging 17% just a day after its debut. This sharp decline follows a heated debate over LayerZero’s innovative yet contentious approach to distributing the token.

Upon its June 20 release, ZRO saw an initial surge of 15.15%, peaking at $4.71 within the first 20 minutes. However, the token's price plummeted 22% within two hours, a fluctuation often observed in token airdrops where recipients quickly sell off their tokens.

The controversy stems from LayerZero’s unique distribution mechanism, which requires users to donate $0.10 in USDC, USDT, or native ETH for each ZRO token claimed. LayerZero asserts that this donation, aimed at raising approximately $18.5 million for the Protocol Guild—a collective funding mechanism for Ethereum developers—is a step towards solving the issues plaguing traditional airdrops.

In a June 20 post on X (formerly Twitter), LayerZero explained: “To claim ZRO, users must donate $0.10 in USDC, USDT, or native ETH per ZRO. This small donation goes directly to the Protocol Guild.”

However, this approach has sparked backlash from the crypto community, with many arguing that the mandatory donation transforms the airdrop into something resembling an initial coin offering (ICO). Users voiced their displeasure with comments such as “Is this a joke?” and “How about you pay for that.”

LayerZero has consistently stated that the ZRO launch is “not an airdrop.” In a June 20 statement, the company emphasized that traditional airdrops fail to meet their original goals of equitable distribution, community building, and protocol health, largely due to the prevalence of airdrop farming and Sybil attacks—where multiple wallets are created to exploit airdrop opportunities.

Bryan Pellegrino, co-founder of LayerZero, spent the day defending the token launch, reiterating that the donation is optional and intended to support the protocol. “There is no forced donation. If you don’t want to donate... simply don’t claim. This is not something you own; it’s something being offered,” he stated. Pellegrino later expressed his exhaustion on social media, saying, “Such an unreal day, as exhausted as I’ve ever been in my entire life. Going to sleep for an unknown amount of time with notifications off. Godspeed all.”

While some community members decried the donation as a “tax,” others supported the initiative. Adam Cochran, a prominent voice in the crypto space, defended the mechanism in a June 20 X post, describing it as a “good way to set a base cost value for a token” and deter Sybil operations.

This debate comes in the wake of ZkSync's recent struggles with Sybil wallets during its June 17 airdrop, despite implementing stringent detection measures. Connor King, a developer at Irys, praised the clean and user-friendly design of the ZRO claim page, comparing it to Spotify Wrapped.

As of now, ZRO is trading at $3.35, marking a 17% drop in the last 24 hours, according to CoinMarketCap data.