Scroll Airdrop Analysis

Introduction

Scroll is leading a new wave of scalability solutions for Ethereum, built on zkEVM technology to offer faster, cheaper transactions while retaining full compatibility with Ethereum’s developer environment. It has secured over $700M in TVL (image below) through its community engagement approach.

Since its mainnet launch in October 2023 till date, 79,213 ETH worth over $200M has been bridged on Scroll.

In April of 2024, they launched their Sessions Campaign and this report will be looking into them. The campaign has been instrumental in their growth from less than $100M to over $700M TVL and demonstrates strong market traction.

Despite the impressive TVL increase, before their mainnet launch in October 2023, they had a valuation of $1.8B but lost 50% of its value to approximately $900m as of the time of this article.

In this analysis, we will examine Scroll’s Session Campaign, which was instrumental in boosting their TVL, while also exploring how the campaign’s mechanics may have contributed to the decrease in their Fully Diluted Valuation (FDV).

Explain Scroll Like I’m 5

Scroll is a Layer 2 scaling solution that enhances Ethereum’s capabilities without sacrificing its security. We can break it down with the following;

• It processes transactions more efficiently by bundling them together and using advanced cryptography (zkEVM technology)
• It maintains full compatibility with Ethereum’s tools and infrastructure, making it seamless for developers to build on
• It significantly reduces transaction costs while inheriting Ethereum’s security
• It regularly synchronizes with Ethereum to ensure all transactions are verifiable and secure

In simple terms: Scroll makes Ethereum faster and cheaper to use while keeping everything just as secure.

Let’s dive into the mechanics of the campaigns launched…

Campaign Analysis

Scroll introduced its innovative loyalty program “Scroll Sessions” as a multi-phase community rewards initiative. The program began with Session Zero, introducing what they called “Scroll Marks” as a loyalty metric to reward user participation.

As the campaign went on, more features like bridging assets with other platforms were added. More features were also added as they moved to Session One.

Campaign Overview

Campaign Name: Scroll Sessions

• Session Zero
• Session One

Campaign Duration:

• Session Zero — 11 weeks (April 17, 2024 — June 22, 2024)
• Session One — 18 weeks (June 22, 2024 — October 22, 2024 (TGE))

Campaign Allocation: 55,000,000 SCR tokens (5.5% of the total supply)

TVL Growth:

• Session Zero — 281% increase (from $57.35M to $217.35M)
• Session One — 253% increase (from $217.35M to $765.26M)
  source

Project Goals

The primary goals of the campaign was to;

1. Increase the TVL of the platform.
2. Reward the community for participation and engagement

Desired User Actions

To achieve the project goals, the campaign was designed to incentivize:

For Session Zero:

1. Bridging ETH or wstETH to Scroll
2. Holding assets on the platform
3. Using the native bridge or approved third-party bridges

For Session One (Additional Actions):

1. Providing liquidity on approved DEXes (Ambient, Nuri)
2. Lending/borrowing on supported platforms (Aave, Rho Markets)
3. Engaging with additional protocols (Layerbank, Cog Finance, Pencils Protocol, Tranchess)

Campaign Summary and Rules

Session Zero

Duration:

• Start Date: April 17, 2024
• End Date: June 22, 2024

Eligibility Criteria and Key Actions:

• Bridging Assets:
  Users were eligible to earn Scroll Marks simply by bridging ETH or wstETH via the native Scroll bridge (image below) or STONE using the LayerZero protocol.

• Holding Assets:
  Once assets were bridged, users only needed to hold these assets on Scroll. The longer the period, the longer their marks.
• Retroactive Rewards:
  Scroll also rewarded early community members by allocating Marks to those who had already deployed assets on Scroll from October 10, 2023 (the date of Scroll’s Mainnet genesis block).

The following formula was used to calculate the marks:
Marks = Value x Action x Time

Value: The more assets a user holds or provides as liquidity, the more Marks they earn.

Action: Engaging in valuable DeFi activities, such as providing liquidity or borrowing/lending, results in higher rewards.

Time: The longer users participate in these activities, the greater their rewards.

• Canvas Marks Booster
  Canvas is an identity system on Scroll that allows participants to add more Marks through engagement in community and project initiatives. By interacting with various projects throughout the Scroll ecosystem, you will be able to collect certain achievements in the form of “badges.”

We can also call this a Marks Booster, helping users reach the required threshold of 200 Marks (to be eligible) or increase their current Marks count. The tier system is as follows;

• Tier 1: 1–4 badges → 25 Marks
• Tier 2: 5–9 badges → 40 Marks
• Tier 3: 10–19 badges → 50 Marks
• Tier 4: 20+ badges → 60 Marks

Examples of some badges;

To get badges, users will have to mint their scroll canvas on the Scroll website (image below)

Results:

Session Zero saw the TVL of Scroll increase by 281% (from $57.35M to $217.35M) from April 17 to June 22, 2024 (image below)

Session One

Duration:

• Start Date: June 22, 2024
• End Date: October 22, 2024 (TGE)

Eligibility Criteria and Key Actions:

• Continuing Bridging and Holding Assets:
  Users could still earn Marks by bridging assets, similar to Session Zero. However, Session One allowed for multiple bridges (e.g. Hop Protocol, Celer Network’s cBridge, Synapse Protocol, etc.) to be used, broadening the range of eligible assets and making the campaign more accessible.
• New Reward Opportunities:
  Additional ways to earn Marks were introduced, focusing on deeper engagement with the DeFi protocols available on Scroll. Specifically, users could now earn Marks by providing liquidity or participating in lending and borrowing within the ecosystem:
• Liquidity Provision: Marks could be earned by providing liquidity to Ambient and Nuri, two decentralized exchanges (DEXes) operating on Scroll.
• Lending and Borrowing: Users could also earn Marks by engaging in lending and borrowing activities on Aave, Rho Markets, and other platforms like Layerbank, Cog Finance, Pencils Protocol, and Tranchess.

Results:

Session One saw the TVL of Scroll increase by 253% (from $217.35M to $765.26M) from June 22 to October 22, 2024 (image below).

Observe the rise of the TVL (image below) really took off after the launch of session one.

Airdrop APY

To calculate the APY, we need to calculate the cost and reward of engaging with Scroll Network.

First, let’s calculate the cost of participating in the Scroll campaigns;

Bridging Costs (ETH Transaction Fees): Scroll’s campaign required users to bridge assets, such as ETH or wstETH, to the Scroll network.

Liquidity Provision and Lending/Borrowing: Users could earn Scroll Marks by providing liquidity or participating in lending/borrowing on platforms like Aave, Ambient, Nuri, etc. Let’s assume a user provides 1 ETH worth of liquidity or loan assets that’ll be tied up for the duration of the campaign.

Average Cost of Participation:

To get the cost of participation, we’ll analyze some wallet transactions of users who participated in the Scroll airdrop.

By analyzing some wallet transactions;

$13,452 was deposited into Scroll for 3 months and 241 SCR was gotten (source)

• 241 SCR / ($13,452 * 3 months) = 0.00597 SCR per dollar per month

$1,922,213 was deposited into Scroll for 5 months and 51,391 SCR was gotten (source)

• 51,391 SCR / ($1,922,213 * 5 months) = 0.00535 SCR per dollar per month

$2,700,196 was deposited into Scroll for 2 months and 35,640 SCR was gotten (source)

• 35,640 SCR / ($2,700,196 * 2 months) = 0.0066 SCR per dollar per month

From the above calculations, we can estimate that a user will get 0.006 SCR per dollar per month of deposit in Scroll.

Assuming a user deposits 1 ETH ($2,500) for a year (12 months), the user will get;

$2,500 × 12 months × 0.006 = 180 SCR

If the price of SCR at claiming is estimated to be $1.16 per SCR, 180 SCR is worth $208.8 (1.16 * 180).

APY Calculation:

Using this formula; APY = (1 + ROI)^(365/campaign_days) — 1

ROI = (Profit / Initial Investment) × 100

Initial Investment = $2,500

Profit = $208.8

ROI = ($208.8 / $2,500) × 100 = 8.35%

APY = (1 + 0.835)^(365/365) — 1

APY = 8.35%

Community Feedback

The community was initially annoyed with the points system mechanics. However, they were impressed with the upgrades introduced by Scroll. After the airdrop, they were disappointed with the low returns.

When Session Zero started, we saw a lot of complaints from the community about the mechanics of the marks and then about the low number of marks allocated to them;

During the Session Zero Campaign, the community were happy when Marks were enabled on USDC, USDT, @KelpDAO wrsETH, and current @Tranchess assets.

After the launch of Session One, the community were not still happy with the points system implemented by Scroll;

After the launch of the Airdrop, the community was not impressed at all with the returns they made;

Conclusion

Let’s be real about Scroll Sessions — it’s a bit of a mixed bag.

On paper, the numbers look great. Growing from less than $100M to over $700M in TVL and that’s impressive. The team clearly knows how to build a solid technical foundation and attract capital. They’ve also done a good job getting major DeFi protocols on board and expanding their ecosystem.

But there’s quite a gap between these impressive metrics and how the community actually feels about the program. The marks system, while innovative, just didn’t click with users. People were confused and frustrated about how marks were allocated, and this frustration stuck around even after they expanded to include more assets and moved into Session One. This frustration of getting less than expectations may be a reason for the large loss of valuation experienced by Scroll.

The final airdrop returns really drove this home. Despite all the participation and engagement, when it came time for rewards, the community felt the returns didn’t justify their involvement. It’s a classic case of “expectations vs. reality.”

Looking ahead, Scroll would need to do better in transparent communication about rewards and better alignment between user effort and returns could make all the difference. Scroll is currently working on that by preparing Scroll Sessions 2. They’re revamping the marks system to make it simpler and more transparent. Hopefully, that’ll regain the trust of the community and raise its current low price.

References

• https://defillama.com/chain/Scroll
• https://dune.com/gasweighing/scroll-on-mainnet
• https://cryptorank.io/ico/scroll-zkp
• https://www.coingecko.com/en/coins/scroll
• https://scroll.io/bridge
• https://scroll.io/canvas-and-badges
• https://scroll.io/canvas/mint
• https://x.com/Scroll_ZKP/status/1780584704175161392
• https://x.com/OmmiSatoshi/status/1790754782023451127
• https://x.com/Allii137070/status/1790838168222064683
• https://x.com/Scroll_ZKP/status/1796689926718992588
• https://x.com/SlayerSley/status/1804590941233086712
• https://x.com/J2producer/status/1848653388780642638
• https://x.com/Vandallet_X/status/1848673127024234685

Disclaimer:

The information provided in this article is for informational purposes only and reflects the research and opinions of One Click Labs. It should not be considered financial, legal, or investment advice. Airdrop participation involves risks, including potential loss of funds, and readers are encouraged to conduct their own due diligence. One Click Labs does not endorse or guarantee the success of any project mentioned and is not liable for any losses incurred due to airdrop participation or reliance on the information provided.