Scroll under attack for favoring Binance users over its own community

Scroll has received heavy criticism since it released its airdrop allocation. Most of the backlash has come from its community because of the project’s decision to allocate 5.5% of the SCR token supply to Binance’s launchpool. 

The move has turned many of Scroll’s early supporters against the project. Those early adopters had expected more favorable treatment after their activities in the Scroll ecosystem over the past two years. 

Early Scroll adopters feel sidelined by the allocation 

Only 7% of the total 1 billion tokens allocated for the first round of airdrops will go to early adopters. On the other hand, Binance users can claim a substantial share by staking BNB in just a few days. 

Scroll’s decision to allocate so much to the Binance launchpool has left many of its early supporters feeling sidelined. According to critics, the project has bent the knee to the system that favors larger holders and centralized exchanges, which is a direct contradiction of the project’s decentralized ethos. 

Since news of the allocation spread, X (formerly Twitter) has been filled with users expressing frustration. They feel that all their efforts to support Scroll have gone unrewarded, especially given the heavy interaction fees they’ve incurred over time. 

Aside from the general dissatisfaction over the allocation, the project has also delayed taking the snapshot of eligible users until October 19. This has left many concerned that the airdrop could become even more diluted as more participants rush in at the last minute. 

Ye Zhang, Scroll co-founder, defends Binance partnership 

I don’t think partnering with Binance is "kneeling to a CEX for listing" – it's way more than that, it's a strategic decision to build a partnership for growth and broader support. However, it is indeed a tough decision. Here are some of my thoughts:

1) Binance on-ramp and…

— Ye Zhang 📜 (@yezhang1998) October 11, 2024

Following the backlash, Ye Zhang, one of the founders of Scroll, took to his X profile to address community concerns. 

According to Zhang, the partnership with Binance is not just for listing purposes; it is also a strategic move to expand and secure broader market support.

Zhang pointed out how critical Binance’s entry and exit services are for stablecoins in emerging markets. He used Africa as an example of such a market, claiming that Binance has a better reputation and is more widely used than Ethereum in the continent. 

In his words: “When I visited Africa, I saw that everyone was using Binance – it holds even stronger legitimacy for many locals than Ethereum.”

Zhang also stated that the 5.5% allocation of tokens for the Binance launchpool will come out of the ecosystem and growth budget meaning that it will not detract from the community airdrop pool. He also highlighted how Scroll reserves a significant portion of tokens for community rewards.

To avoid unfair advantages for large investors, Scroll also implemented a purchase limit of 2,500 SCR per user during the pre-market phase. This is supposed to ensure broader distribution among potential holders and emphasizes the project’s commitment to long-term community engagement and growth.

Sandy, a Scroll “core contributor” on X, also addressed the issue. According to a post from the page, the partnership with Binance is an attempt to adapt to current market conditions and strengthen the project’s competitive position. 

For us, 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.

ETH deposits and withdrawals on Scroll are now live on Binance,…

— Sandy | Scroll 📜 | 🦇🔊 (@sandyzkp) October 11, 2024

They hope the partnership with Binance will provide Scroll with a broad base of investors and essential infrastructure support. 

The Scroll airdrop will take center stage in the coming days, after which its primary focus will shift to making progress on Scroll’s tech roadmap and ecosystem building. 

Binance’s dominance of the token market

Since its launch in 2017, Binance has established a dominant position in the token market. It has become sort of the “holy land” for projects hoping to appear more legitimate to investors. 

Projects that secure a listing on Binance are often viewed as more credible. It is almost like a seal of approval that also provides the tokens with increased market exposure. 

Binance’s influence has projects feeling FOMO and pressured to get the exchange’s endorsement for wider recognition. Somehow, it maintained its dominance in the token markets, even with CZ’s exit and subsequent imprisonment. 

However, some issues have been popping up regarding this FOMO. For example, there have been comments on social media from netizens who believe that Binance now lists any project, including those that aren’t the best for investment. 

There are also complaints about how projects allow Binance to negotiate better arrangements for its users, sometimes at the expense of the project and token supporters. 

This exact scenario is playing out with Scroll, and the situation has caused friction and further concerns about preferential treatment for Binance over grassroots community interests.