I've been tempted to get into layer Zero because I see almost every project using it as their cross chain solution. But man does their tokenomics scare me off..

First of all, only about 10% of the tokens are circulating and the rest will unvest over 3 years. That's very short. Most of it is held by VCs and the team.

Second, the token is mostly a governance token and is not required to pay for network fees.

LAYER ZERO TOKENOMICS

LayerZero's native token, ZRO, has a fixed total supply of 1 billion tokens. The distribution is structured as follows:

Community and Ecosystem Allocation: 38.3% of the total supply is designated for the community, developers, and users. On the first day of the airdrop, 8.5% was made available to eligible participants, with the remainder supporting future distribution programs and ecosystem growth.

Strategic Partners: 32.2% of the tokens are allocated to strategic partners, following a three-year vesting period that includes a one-year lock-up and subsequent monthly unlocks over the next two years.

Core Contributors: 25.5% is reserved for core contributors, adhering to the same vesting schedule as strategic partners.

Future Distributions: 15.3% is set aside for future distributions to users, protocols, infrastructure builders, and community members through programs like Requests for Proposals (RFPs).

Tokens Repurchased: 4% of the tokens have been repurchased and pledged to the community bucket to ensure fair and sustainable distribution.

Regarding the emission schedule, the next significant token unlock event is scheduled for June 20, 2025, when approximately 24.68 million ZRO tokens (2.47% of the total supply) will be released.

UTILITY

LayerZero's native token, ZRO, serves multiple functions within its ecosystem, primarily focusing on governance and incentivization. However, its role in transaction fees is not exclusive, as the protocol allows for flexibility in fee payments.

Governance and Incentives: ZRO acts as the governance token for LayerZero, enabling holders to participate in decision-making processes regarding protocol upgrades and changes. Additionally, it serves as an incentive mechanism to encourage active participation and development within the LayerZero community. BINANCE ACADEMY

Transaction Fees: While ZRO can be used to pay for cross-chain message fees, it is not the sole option. Users have the flexibility to utilize other tokens, such as USDC or WETH, for these fees. This indicates that ZRO does not have a unique use case in this context, as it operates alongside other tokens for transaction purposes. DATA WALLET

Implications for Buying Pressure: Given that ZRO is not exclusively required for transaction fees and can be substituted with other tokens, the direct buying pressure on ZRO from transaction activities may be limited. Its demand is more closely tied to governance participation and community incentives rather than being driven by transactional necessity.

In summary, while ZRO plays a significant role in governance and incentivization within the LayerZero ecosystem, its impact on buying pressure is moderated by the protocol's flexible approach to transaction fee payments.

Sources: https://www.datawallet.com/crypto/what-is-layerzero , https://cryptorank.io/price/layerzero/vesting Show Less