Scroll Faces Community Backlash Over Binance Patnership

The crypto community has significantly criticized the Ethereum Layer-2 network Scroll’s SCR governance token on Binance Launchpool.

Scroll, a zkEVM rollup, currently ranks as the sixth-largest Ethereum Layer-2 network. Data from DeFillama shows that the total value locked (TVL) on it is $1.09 billion.

Earlier in the week, BeInCrypto reported that Scroll partnered with Binance. This move is designed to distribute 55 million SCR tokens, representing 5.5% of the token’s total supply, through the exchange’s Launchpool program. This initiative ran from October 9 to October 10 and sparked a wave of dissatisfaction among community members.

Many users expressed concern that the project prioritized Binance participants over its dedicated user base. The primary contention arose from the token distribution strategy.

Community members expressed frustration that Scroll allocated only 7% of tokens to mainnet participants — who had contributed for over a year — while Binance Launchpool users received 5.5% after just two days of involvement.

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This disparity led to accusations that Scroll was prioritizing centralized exchange partnerships over its commitment to decentralization.

“It’s a tough decision to make. I strongly doubt that it’s a good decision long term. Imagine Vitalik Buterin paying 5.5% to
Okx when Star_okx refused to list ETH. I like everyone in the scroll team, but kneeling to CEX is really disappointing,” one disgruntled user wrote.

In response to the criticism, Scroll co-founder Ye Zhang explained that the Binance listing was part of a larger strategy designed to support growth. He acknowledged the challenges surrounding the decision but emphasized that it aimed to ensure the protocol’s long-term success.

Zhang outlined the practical advantages of partnering with Binance, particularly regarding stablecoin on-ramps and off-ramps, which are vital for Scroll’s ecosystem. He noted that to compete effectively with established platforms like Tron, significant backing from major centralized exchanges is necessary. This backing, he argued, would help attract a broader range of users to the platform.

Zhang clarified that the funds allocated to the Binance Launchpool came from the protocol’s growth budget. He also dispelled rumors that they came from the community airdrop.

“We’ve reserved 15% for community airdrops, and the launch pool allocation comes from our ecosystem and growth category, it doesn’t influence how much our own community will get. It’s because we believe it will drive global expansion as an ecosystem growth strategy We’ve compared it to Apple charging fees from apps – it’s not unreasonable considering the level of distribution they provide. Our own community will get way more via a sequence of airdrops similar to what Optimism has done,” Zhang stated.

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In conclusion, Zhang expressed confidence that the partnership with Binance would help address significant challenges related to token distribution and organic growth — issues that commonly affect Layer-2 solutions. He referenced other projects like Arbitrum and Base, pointing out that while they have made strides, no Layer-2 solution has yet achieved widespread adoption.

“Token distribution isn’t a one-time event, it’s a growth lever and also helps with protocol decentralization and governance. After the initial sell-off, we expect the community that trusts us to hold, and distribution will stabilize in a healthy way,” he explained.