The widely awaited distribution details and airdrop of the Scroll token (SCR) commenced this week with the protocol revealing a total supply of 1 billion.

According to the official announcement, the first crypto airdrop would consist of 5.5% of that total to early ecosystem contributors. However, the launch has been met with criticism as airdrop farmers expressed disappointment after finding out how much they got.

 

On-chain participants who had earned 200 or more Scroll were eligible to receive a portion of the 40 million SCR tokens that would be distributed to the airdrop along with an additional 1% split evenly among eligible wallets and a 0.5% bonus to users who met specific criteria.

The distribution also included 17% for investors, 10% for the Scroll Foundation, and 15% allocated to airdrops, of which 7% have already been distributed.

SCR Supporters Claim That Opportunistic Farmers Got the Best Part of the Airdrop

Users and early adopters of the Scroll protocols complained that they received only a small fraction of the airdrop despite their support of the project from the get-go.

This happened as the project’s snapshot was heavily promoted, which resulted in a wave of airdrop farmers flocking the protocol to opportunistically take advantage of the airdrop. This made the already small portion diluted even further, angering many of the most diehard community members.

Scroll may have been motivated to do this to create some hype and lure additional users to the protocol but, in the process, they hurt their most loyal supporters as they did not take adequate measures to screen out opportunistic farmers or reduce their share of the rewards.

As a result, early adopters were disappointed by the number of SCR tokens as it failed to provide compensation for the time, effort, and risk they took to take the project to its current state.

Notable community members voiced their frustration publicly, with DYOR.eth describing it as “one of the worst airdrops ever” and promptly liquidating their position.

The market’s response has been equally confronting as CoinGecko data shows a 16% decline in SCR’s value following the airdrop. The token currently trades at $1.04 and has registered an 8.5% drop in the past 24 hours while its market capitalization stands at $1.04 billion on a fully diluted basis.

Meanwhile, the 24-hour trading volume stands at $346.6 million which represents nearly 76% more than the current market capitalization based on the number of tokens that are already in circulation.

Scroll’s TVL Dropped Sharply After Snapshot

The announcement also triggered significant volatility in the protocol’s Total Value Locked (TVL) – a measure of the amount of assets deposited and used on a decentralized finance (DeFi) platform.

Following the announcement of an upcoming snapshot, the project’s TVL progressively surged to nearly $1 billion – a 20% increase in just a week. A snapshot is taken by crypto projects to create a record of the token holders and users that will be eligible for an upcoming airdrop.

However, just 24 hours after the snapshot was taken, the TVL dropped by a staggering 70% as short-term farmers took advantage of the situation to turn a profit on short notice.

The protocol’s transaction volume similarly reflected this volatility, peaking at 962,000 transactions on October 18 before dropping to 289,000 transactions within 24 hours, marking a 70% decrease according to L2Beat data.

Binance Launchpool Gets a 5% Share

Another controversial topic that impacted the success of the SCR airdrop resulted from Scroll’s decision to allocate 5.5% of the total supply to the Binance Launchpool.

Critics, including X user Axel Bitblaze, highlighted how the unfairness of the 7% allocation for early adopters who contributed over two years versus the 5% designated for Binance Launchpool participants.

In response to the criticism, Scroll contributor sandyzkp defended the decision, stating: “Binance is more than just a listing, it’s the best channel to reach global distribution, it will open the on-ramp and off-ramp channels and help us grow to the next stage, especially in emerging markets.”

However, concerns persist given the historical performance of tokens launched through the Binance Launchpool, with notable examples like Arkham’s ARKM dropping from 90 cents to 30 cents and Portal’s PORTAL, which declined from $3.60 to $2.08 shortly after launch.

Scroll May Struggle to Keep the Community Engaged After a Disappointing Airdrop

The Scroll airdrop experience once again shows the challenges that Layer-2 and DeFi protocols face when they try to scale and grow their projects via airdrops and other similar token distribution strategies.

The protocol’s future plans include product development, expansion into international markets, and potential improvements to zkEVM (zero knowledge Ethereum virtual machine) functionalities. The team has set aside additional tokens for future airdrops to keep incentivizing the community and maintain a long-term commitment to the protocol’s success.

However, the perceived unfairness of the latest distribution may complicate the project’s roadmap as key developers may decide to cash out their holdings and move to the next venture if they feel that they were not compensated fairly for their contribution.

The dramatic decline in transaction volume and TVL following the snapshot period was quite similar to the situation observed with other Layer-2 projects like ZKsync, which experienced an 80% drop in transactions post-airdrop.

This trend suggests a persistent challenge in maintaining user engagement beyond initial token distribution events.

Some community members have raised concerns about insider accumulation as well, with crypto investor Anon Vee claiming on X: “Scroll team is so greedy! After allocating 23% to themselves, they also chose to Sybil the airdrop by allocating team addresses 1m+ marks each.”

These allegations, combined with a rapid drop in the project’s TVL and liquidity, raise questions about Scroll’s ability to outlive a disappointing airdrop.

The protocol’s ability to navigate these challenges while maintaining its technological edge and community growth will likely determine its long-term success in the competitive Layer-2 landscape.