Layer-2 Network Scroll’s Governance Token Launch Falls Short of Expectations
The highly anticipated launch of Scroll’s governance token, SCR, has been met with disappointment as the token’s price has plummeted by 32% in just over 24 hours since its debut. This significant drop has raised concerns among investors, who are now questioning the project’s long-term viability. The total value locked on the network has also declined by 24% in the past week, a clear indication that investor confidence is wavering.
Token Performance and Market Cap
The SCR token’s performance has been underwhelming, with its price dropping from $1.40 to $0.94 within a day of its launch. This sharp decline has resulted in a significant reduction in market capitalization, which now stands at below $180 million. Despite being touted as the "turtle that wins the Ethereum scaling race," Scroll’s governance token has fallen out of the top 250 largest tokens on CoinMarketCap.
Total Value Locked (TVL) Declines
The total value locked on Scroll has experienced a decline of 23% in the past week, with data from DefiLlama showing a peak of $1 billion. This decrease in TVL is a concerning trend for investors, as it indicates that users are withdrawing their assets from the network. The sharp drop in TVL highlights the issues plaguing Scroll’s governance token launch.
Token Allocation and Distribution Issues
The problems surrounding Scroll’s SCR token appear to stem from the allocation and distribution of tokens. In the lead-up to the token’s release, users expressed frustration at the decision to set aside 5.5% of the supply for Binance Launchpool and just 7% for the initial airdrop. This decision has now been compounded by the revelation that Scroll refused to implement an airdrop cap, allowing whales to scoop up the majority of available tokens.
Airdrop Distribution
According to Andrew10Gwei on X, the top 10 wallets will receive 11.7% of the airdrop, while the top 100 will receive 34.4%. This skewed distribution has led to concerns that investor demand cannot keep pace with the selling pressure from whales who received a substantial airdrop. The lack of an airdrop cap has disrupted the equilibrium of token supply, making it challenging for Scroll’s governance token to sustain a price rally.
Points Farming and Token Supply
Scroll ran its airdrop campaign by rewarding early adopters and users with "marks" that could eventually be converted into an airdrop. This method, known as "points farming," has been used by various projects in the past few years. However, the omission of fixed allocation bands or a maximum cap has led to issues with token supply. The absence of these measures has created a difficult short-term future for Scroll’s governance token, as whales need to be convinced not to sell while prospective investors must believe that the token has future upside.
Conclusion
The disappointing launch of Scroll’s governance token has raised concerns about the project’s long-term viability. The decline in total value locked and market capitalization highlights the issues plaguing the network. The lack of an airdrop cap and the skewed distribution of tokens have disrupted the equilibrium of token supply, making it challenging for Scroll’s governance token to sustain a price rally. While points farming can provide an initial boost in activity, it can also have negative long-term consequences if investors do not hold onto the token after an airdrop is distributed. As the project navigates these challenges, it remains to be seen whether Scroll will be able to recover from this disappointing start and achieve its goals as the "turtle that wins the Ethereum scaling race.