Airdrop Under Scrutiny: Over 150 Layer 2 Projects, Scroll Faces the Challenge
Scroll, Ethereum’s Layer 2 solution, has delayed its airdrop. On October 22, Scroll will distribute airdrops to eligible users based on their on-chain activity. Prior to this, on October 10, Scroll’s token (SCR) was listed on Binance’s Launchpool.
The airdrop snapshot is set for October 19. Interestingly, Scroll launched on Launchpool before the airdrop, which is a rare move in the industry. Additionally, only 5.5% of the tokens will be distributed via the airdrop, while 7% are allocated to Launchpool.
These decisions have sparked dissatisfaction among the community. Users who worked hard to complete tasks and bring data to the project feel overshadowed by the traffic that exchanges like Binance generate for the project.
This highlights a deeper issue in the current Ethereum Layer 2 landscape: the market is crowded, and Ethereum Layer 2 projects are numerous, but interest is waning. Gaining traction has become increasingly difficult, and projects, including Scroll, have no choice but to rely on exchanges for visibility and traffic.
A Missed Opportunity
The airdrop distribution rules have drawn skepticism, primarily because Scroll allocated 7% of the tokens to Binance Launchpool, and the token listing on Binance occurred before the airdrop distribution.
In response to these concerns, Scroll co-founder Sandy Peng stated that Binance is more than just a listing platform for Scroll; it’s the best channel for global distribution, enabling deposits and withdrawals while helping Scroll grow to the next phase, especially in emerging markets. Currently, Scroll ETH deposits and withdrawals are live on Binance, and soon, Binance will directly support stablecoins on Scroll, making it the first zkRollup to receive such support.
Scroll’s primary goal is clearly to expand its market reach via Binance. The delayed airdrop and Scroll's reliance on Binance’s platform reflect the harsh reality: the Layer 2 market has already been heavily segmented. Over 150 Layer 2 solutions are either live or soon to be launched.
Ethereum scaling solutions are divided into two main tracks: Optimistic Rollups (Op Rollups) and zkRollups. Although both execute similarly, they differ in the transaction validation process.
Scroll falls under the zkRollup category. In the short term, Op Rollups are more cost-effective and technically accessible, making them more aligned with current needs and easier to implement. zkRollups, on the other hand, have higher technical barriers but are more suited for sectors demanding heightened privacy and security. Over time, as zk technology advances, the limitations of zkRollups are expected to diminish.
Simply put, Op Rollups have been easier to implement in the short term. By 2022 and early 2023, leading Op Rollup projects like Optimism and Arbitrum had already gone live and issued tokens. Most notable Op Rollup Layer 2s had completed their mainnet launches and token distributions by 2023.
In contrast, zkRollup technology is more complex, requiring more development time. As a result, zkRollup-based projects have been slower to issue tokens, with many only starting to launch in 2024.
Launching its token in October 2024, Scroll faces a Layer 2 market that has already been largely divided. Ethereum's broader ecosystem is also weakening. The growing fragmentation and interoperability challenges among Layer 2s pose further threats to the long-term development of this space.
The Fleeting Nature of Traffic-Based Strategies
In this highly competitive and chaotic market, Scroll has employed its own strategies to succeed. Securing a listing on Binance is a testament to its efforts and achievements.
As of October 11, according to DefiLlama, Arbitrum ranked fifth in total value locked (TVL) among public chains, Base ranked sixth, and Scroll ranked eleventh. Scroll's TVL is among the top three Ethereum Layer 2 projects.
Scroll's data began to surge in May 2024, following the introduction of Scroll Marks user points on May 15, which led to a sharp rise in TVL, largely driven by the anticipation of an airdrop.
In terms of airdrop points, Scroll collaborated with multiple projects, enabling users to accumulate airdrop points across several platforms, including Stone, Eigen, Symbiotic, and Pencils, by cross-chaining Stone tokens.
Currently, Scroll's TVL is propped up by Restaking, largely due to its collaboration with these projects. Stone tokens alone account for $3.13 billion in TVL, making it the top contributor.
However, unlike other Layer 2s that rely on ETH, WETH, WBTC, and stablecoins, Stone is less liquid and primarily serves to boost TVL figures. Scroll’s TVL, therefore, is largely inflated through the stacking of Restaking assets, which is unlikely to be sustainable.
The Way Forward for Scroll
Scroll’s challenges are emblematic of broader issues facing the Layer 2 sector. The market is oversaturated, with high technical homogeneity and fragmented liquidity. Rather than competing with each other, Layer 2 projects might benefit more from collaboration.
Vitalik Buterin has suggested the need for an open, decentralized protocol (without operators or management) to enable fast asset transfers between Layer 2s, integrating it into wallets' default sending interfaces. He also emphasized the importance of improving basic functionality, as the Layer 2 ecosystem currently feels disjointed compared to the unified Ethereum experience.
Ethereum Foundation researcher Justin Drake has also acknowledged that fragmented liquidity and composability across Rollups (and more broadly across Layer 2s) is a problem, though he believes this is a temporary phase. We are currently in the "adolescent stage" of the Rollup-centric roadmap, and universal composability across Rollups may be restored in the future.
For Scroll, relying on traffic-driven strategies is unsustainable in the long run. If it can contribute to solving the liquidity fragmentation issue, it might stand out and ultimately succeed.
After all, as Vitalik pointed out, zk technology is the ultimate solution for Ethereum Layer 2 development.
