On September 3, the long-dormant coin circle became lively again. Scroll, known as the secondary king project, posted a video on Twitter hinting that its token will soon be TGE. TGE means that Scroll is about to enter the airdrop distribution stage. Therefore, many KOLs forwarded the message and the market was also noisy. After all, in this fucked-up market, a sudden airdrop income is also a timely help. To be honest, if Scroll hadn't posted this video, I would have almost forgotten about this project. In the residual heat of the coin craze last year, I also bought this project in batches, but as the market became constipated and my business focus shifted to chain games, I gradually forgot about this project and even stopped paying attention to the L2 sector. I believe that many friends are the same. So the question is, in such a sluggish market and the market collectively boycotted VC coins, can Scroll, a project that was once popular among VCs, still perform well after the token is listed? In this article, I will analyze this issue from three dimensions to give everyone an expectation of the value of Scroll's airdrop.
Scroll's strong VC background and the high profile of the project owner
Let me first tell you about the background of this project for those who don’t know about it. Scroll is an Ethereum L2 public chain project based on ZK Rollup, jointly developed by the Scroll team and the Ethereum Foundation team. Unlike other L2 projects, Scroll got a good hand at the beginning. As early as April 2022, Scroll received a $30 million Series A financing, and then announced another two rounds of financing in February and May 2023, with a total financing amount of up to $83 million. In the last round of financing it announced, the project valuation has reached an astonishing $1.8 billion. The investment institutions are all big names, including Polychain Capital, Sequoia Capital, IOSG and other well-known institutions. It can be said to be a king bomb. Therefore, after Scroll announced the launch of the mainnet in October 23, it attracted a large number of users. The TVL on its chain was $240,000 in early October. Just two months later, it soared to $23.5 million, an increase of nearly 100 times. In the following time, TVL continued to increase. As of now, the TVL on the Scroll chain has reached nearly $700 million.
With such a high-quality financing background, after attracting a large number of users and funds on the chain, the Scroll project has gradually revealed their high profile as a VC system, and the way it is reflected is even more direct than other VC projects. In January 2024, a technician from the Scroll team openly criticized community members on Twitter as "online beggars" and made a stupid statement like "If you are here to ask for alms, then we don't welcome you". I just want to say that everyone comes to the chain to interact not to make money, but to generate electricity for love? As an L2 public chain project, does Scroll have subversive innovations in blockchain infrastructure? No, then why do you ask users to generate electricity for love and use real money to do data for you? The ideas of the team members represent the ideas of the entire project team to a certain extent. Let's take Starknet as an example. Starknet's technicians have also made similar remarks on Twitter. Later, we also saw the results of the Starknet airdrop. They did not even have the most basic respect for early support users, and they were so blatant in their mouse warehouses that they did not even act. Therefore, I believe that Scroll, as a project promoted by VC, is destined to put the interests of investors first and the interests of retail investors last. After all, with the market conditions so sluggish, investors are also short of money, so the results of the airdrop distribution are not optimistic.
Market and exchange attitudes change towards VC-favored coins
The VC coins launched this year can be said to have screwed the retail investors badly. Whether it is Zksync or Starknet in the L2 sector, they basically pulled up a few days before the launch, and then went straight on the road of breaking the issue price and never looked back. The market conditions were not good to begin with. Institutions wanted to sell, project parties wanted to sell, and users wanted to sell. Once the FDV was launched, it was billions, and there were still a large number of tokens to be unlocked later. Users who took over the exchange directly became the scapegoats. As they lost money, the retail investors also reacted and said, "You VC department likes to cut people, right? Okay, then we won't buy it. You can play by yourselves, and we will play meme." So we can find that Starknet and Zksync have been listed on all the major exchanges, so what? Now the daily trading volumes are lower than each other, and Zk can't even make it into the top 100. The insider trading during the airdrop stage, the large number of tokens to be unlocked in the hands of institutions, and the subsequent ecological development difficulties are all the root causes of the market's lack of investment interest in it.
Of course, the current situation is also related to the constipation of the market. We will find that few projects have issued coins in the past two months. One reason is that the market is waiting for the bull market, and these project parties are also waiting, and even have to predict when the bull market will start. After all, listing on the exchange also requires scheduling. If you wait for the bull market to come, you will miss the opportunity. Scroll now hints at TGE, which is likely that the project party is optimistic about the market in October. Of course, according to Scroll's nature, if they make a mistake in judgment, they may also delay TGE. After all, I just hinted and didn't say it clearly. Another reason is that exchanges dare not list coins easily. Although these exchanges will not stand with retail investors, these VC coins will be cut in half after they are launched. It is really unreasonable for their own users to stand guard. The market is not good and the trading volume is low. If they want to cut my users again, what's the point of playing? In the end, users will point at my nose and scold me. So even if Scroll wants to list coins in the first few months, these exchanges may not agree.
Ethereum’s scaling is no longer the mainstream narrative
In fact, to be honest, the narrative of Ethereum expansion broke out during the bear market cycle, because the DeFi craze in the last bull market kept the Gas on the Ethereum chain high, which gave rise to the expansion narrative. Therefore, from 2022 to 2023, the L2 sector flourished, because this narrative was recognized by the market. So from today's perspective, let's think seriously, do we really need so many L2 public chains? In this round of bull market, DeFi has been exhausted of innovation except for re-staking. Now, the re-staking narrative has also died down. The activity on the Ethereum chain is getting lower every month, and the daily Gas is at the level of 2-3gwei. Moreover, OP and Arb have occupied most of the market share. In this case, it is extremely difficult for these emerging L2 public chains including Scroll to develop the ecology. Look at how much money ZK and Starknet have thrown out to develop the ecology. They are engaged in chain games and memes, but they have not caused any waves. The more exaggerated data is that on September 3rd, there were only 2 addresses on the chain that bridged funds into Zksync, with a value of only 0.01eth. This is no different from death. Yesterday, Zksync announced that it would lay off 16% of its employees. For a while, the news that Zksync was going to run away spread on the Internet.
Therefore, when it comes to low, the market is profit-driven, and people go wherever they can make money. In the last bull market, when gas was high, everyone enjoyed it. Now that gas is low, no one wants to use it. Now think about it, is the level of Gas important? It is important, but not the most important thing. The most important thing is that everyone can make money in the ecosystem. This also means that once the Ethereum mainnet is weak, the expansion narrative will be difficult to support. Let's compare it with Catizen, which is about to be listed. As the head project of the Ton ecosystem, it focuses on traffic narrative, can bring a large number of new users to the exchange, and has meme attributes. Retail investors are also willing to take over, and have the qualifications of not fearing the impact of the market. All exchanges are scrambling to list this kind of project. This is the mainstream narrative of the current currency circle. On the other hand, Scroll is indeed born at the wrong time.
In summary, Scroll, as an L2 project favored by VCs, is already in a weak sector. In the current market, it is difficult to please both investors and the community. Taking care of retail investors means offending investors. To take care of investors, retail investors have reached a consensus to boycott VC coins. We don’t even know whether the Scroll team really has the right to choose retail investors. In this situation where neither the team nor the investors are human, if the bull market still does not start in October, its ending may be the same as that of Zk and Starknet. Facing a secondary market with no takers and a steady stream of selling pressure, it has no other choice but to break the issue price.
Of course, after witnessing the tragic situation of projects like Zksync, VC coins like Scroll may be able to usher in a future of extremes. Everyone knows that application projects like Catizen that can bring in new traffic are the most popular. The Scroll project team may have also done some research on application landing and attracting traffic during this period. Although this does not mean that Scroll will definitely do better than the previous big brothers, at least it can stand on the shoulders of the big brothers to make more attempts. For these VC projects, whoever can truly be labeled with the traffic narrative can become the darling of the current market.
The content of this article is only personal analysis and thoughts. If you have different opinions, you are welcome to discuss in our community. If this article is helpful to you, I hope you can pay attention to it. See you next time.
