LayerZero's airdrop window has closed, and there's a clear signal of big wallets dumping; the protocol's revenue hit a three-month low at $ARB , with on-chain activity continuing to shrink.
Post-airdrop data from LayerZero reveals the harsh reality of sell pressure. According to Dune Analytics, over 37% of the claiming addresses have transferred all or part of their ZRO tokens to exchanges within 48 hours after the airdrop claim deadline. Tracking large wallet addresses shows that among the top 100 claiming addresses, 14 sent a total of over 5.2 million ZRO to Binance and OKX within 24 hours, which, at the current ZRO price of about $2.81, represents approximately $14.61 million in potential selling pressure. More concerning is that the Total Value Locked (TVL) of the LayerZero cross-chain protocol dropped by 22% after the airdrop, falling from $5.8 billion to $4.52 billion, indicating that some users not only sold their tokens but also withdrew underlying liquidity.
My take is that LayerZero's airdrop design has structural flaws. In the airdrop distribution, over 60% of the tokens were allocated to the team and investors, leaving only 12% actually circulating within the community. This design leads to a highly concentrated sell-off pressure post-airdrop, lacking natural buy support. The current price movement of ZRO is strikingly similar to STRK after the StarkNet airdrop in April 2024—both saw a quick spike followed by a rapid drop and then entered a downtrend channel. ZRO dropped 5.3% in 24 hours, but trading volume surged to $210 million, indicating that the sell-side is being passively absorbed. On-chain data also shows that market makers have set up a significant wall of sell orders around $2.90, further suppressing the price rebound potential.
What to watch for: The on-chain funding rate for ZRO has turned negative, with short positions in perpetual contracts rising to 58%. If the price breaks below the support level of $2.60, it could trigger a chain reaction of long liquidations. However, a counter-signal is if ZRO shows declining volume around $2.70 and stabilizes in price, indicating that sell pressure is being digested. Trading strategy-wise, I wouldn't recommend bottom-fishing in the short term; waiting for short positions to exceed 65% for a short squeeze opportunity is safer. $ZRO
Arbitrum’s protocol revenue data is also concerning. According to Token Terminal, the total revenue on the ARB chain for the last week of May was just $820,000, marking the lowest weekly record since February 2025. More critically, the number of active addresses fell from 342,000 in April to 268,000, a decrease of 21.6%. On-chain gas consumption has also declined, with the average gas price dropping from 0.12 gwei to 0.08 gwei, indicating that the drop in user activity is not due to L1 congestion but rather a real decline in demand. The weekly trading volume on the decentralized exchange Uniswap on Arbitrum also fell by 34%, from $1.8 billion to $1.19 billion.
My perspective is that Arbitrum is experiencing a typical "narrative retreat" dilemma. The "Arbitrum Stylus" and "gaming chain" narratives from early 2025 attracted a lot of capital, but actual application rollouts have been slow. Currently, ARB's price is $0.41, down over 50% from the 2025 peak of $0.89, but the on-chain data reflects a more fundamental issue: increased competition in the Layer 2 race, with Base and Blast chains eating into Arbitrum's market share. The number of daily active addresses on the Base chain has already reached 1.8 times that of Arbitrum, and Blast's TVL growth rate is three times that of Arbitrum. While ARB's treasury is well-funded (around $4.5 billion), there is a lack of new catalysts to activate on-chain activity.
What to watch for: The on-chain staking rate for ARB is currently only 8.2%, far below Optimism's 15.6%. If the Arbitrum Foundation announces a new staking incentive or buyback plan, it may briefly boost the price. But more importantly, ARB's perpetual contract open interest has dropped by 12% in the past week, indicating that leveraged longs are exiting. Technically, $0.38 is a key support level since August 2025; if it breaks, the next support is at $0.32. Trading strategy-wise, shorting presents a poor risk-reward ratio, but it’s safer to wait for on-chain activity data to show a turning point (like weekly active addresses increasing to over 300,000) before considering going long. $ARB
Interactive question: How long do you think the sell pressure from LayerZero's airdrop will last, or will it rebound like Blur did after the sell-off ends?
Post-airdrop data from LayerZero reveals the harsh reality of sell pressure. According to Dune Analytics, over 37% of the claiming addresses have transferred all or part of their ZRO tokens to exchanges within 48 hours after the airdrop claim deadline. Tracking large wallet addresses shows that among the top 100 claiming addresses, 14 sent a total of over 5.2 million ZRO to Binance and OKX within 24 hours, which, at the current ZRO price of about $2.81, represents approximately $14.61 million in potential selling pressure. More concerning is that the Total Value Locked (TVL) of the LayerZero cross-chain protocol dropped by 22% after the airdrop, falling from $5.8 billion to $4.52 billion, indicating that some users not only sold their tokens but also withdrew underlying liquidity.
My take is that LayerZero's airdrop design has structural flaws. In the airdrop distribution, over 60% of the tokens were allocated to the team and investors, leaving only 12% actually circulating within the community. This design leads to a highly concentrated sell-off pressure post-airdrop, lacking natural buy support. The current price movement of ZRO is strikingly similar to STRK after the StarkNet airdrop in April 2024—both saw a quick spike followed by a rapid drop and then entered a downtrend channel. ZRO dropped 5.3% in 24 hours, but trading volume surged to $210 million, indicating that the sell-side is being passively absorbed. On-chain data also shows that market makers have set up a significant wall of sell orders around $2.90, further suppressing the price rebound potential.
What to watch for: The on-chain funding rate for ZRO has turned negative, with short positions in perpetual contracts rising to 58%. If the price breaks below the support level of $2.60, it could trigger a chain reaction of long liquidations. However, a counter-signal is if ZRO shows declining volume around $2.70 and stabilizes in price, indicating that sell pressure is being digested. Trading strategy-wise, I wouldn't recommend bottom-fishing in the short term; waiting for short positions to exceed 65% for a short squeeze opportunity is safer. $ZRO
Arbitrum’s protocol revenue data is also concerning. According to Token Terminal, the total revenue on the ARB chain for the last week of May was just $820,000, marking the lowest weekly record since February 2025. More critically, the number of active addresses fell from 342,000 in April to 268,000, a decrease of 21.6%. On-chain gas consumption has also declined, with the average gas price dropping from 0.12 gwei to 0.08 gwei, indicating that the drop in user activity is not due to L1 congestion but rather a real decline in demand. The weekly trading volume on the decentralized exchange Uniswap on Arbitrum also fell by 34%, from $1.8 billion to $1.19 billion.
My perspective is that Arbitrum is experiencing a typical "narrative retreat" dilemma. The "Arbitrum Stylus" and "gaming chain" narratives from early 2025 attracted a lot of capital, but actual application rollouts have been slow. Currently, ARB's price is $0.41, down over 50% from the 2025 peak of $0.89, but the on-chain data reflects a more fundamental issue: increased competition in the Layer 2 race, with Base and Blast chains eating into Arbitrum's market share. The number of daily active addresses on the Base chain has already reached 1.8 times that of Arbitrum, and Blast's TVL growth rate is three times that of Arbitrum. While ARB's treasury is well-funded (around $4.5 billion), there is a lack of new catalysts to activate on-chain activity.
What to watch for: The on-chain staking rate for ARB is currently only 8.2%, far below Optimism's 15.6%. If the Arbitrum Foundation announces a new staking incentive or buyback plan, it may briefly boost the price. But more importantly, ARB's perpetual contract open interest has dropped by 12% in the past week, indicating that leveraged longs are exiting. Technically, $0.38 is a key support level since August 2025; if it breaks, the next support is at $0.32. Trading strategy-wise, shorting presents a poor risk-reward ratio, but it’s safer to wait for on-chain activity data to show a turning point (like weekly active addresses increasing to over 300,000) before considering going long. $ARB
Interactive question: How long do you think the sell pressure from LayerZero's airdrop will last, or will it rebound like Blur did after the sell-off ends?