Web3 marks a major evolution of the internet. Unlike Web2’s centralized platforms, Web3 uses blockchain-based systems to prioritize user ownership, transparency, and trust. From the mid-2010s, first with Ethereum’s mainnet in 2015 and later with Solana in 2020, Web3 platforms began enabling peer-to-peer interactions through smart contracts that execute themselves and decentralized applications (dApps) that operate without intermediaries. This paradigm fosters a user-centric digital ecosystem where individuals, rather than corporations, hold greater control over their data, assets, and interactions.

At the core of these ecosystems lie tokens: digital assets that underpin a project’s economic and operational framework. Tokens grant holders voting rights in decentralized autonomous organizations (DAOs), letting community members steer a project’s direction. They also reward contributors—developers, testnet users, and early adopters—for their time and effort, and power economic models through staking, trading, and development-funding mechanisms. By aligning the incentives of diverse stakeholders, tokens are indispensable for driving growth and innovation.

Yet when it comes to allocation: who gets tokens, how many they receive, and when they vest. The choices projects make can spark deep ethical tensions. Prioritizing large exchange allocations, for example, may secure upfront capital but risks alienating grassroots supporters and eroding trust. In the cases of **Privasea **and Zora, significant token grants to Binance’s Alpha program prompted community backlash over reduced rewards for early adopters. These examples highlight the core dilemma: balancing commercial imperatives against grassroots expectations without undermining decentralization.

In this article, we’ll analyze how allocation decisions affected trust and decentralization in these two projects, then propose concrete strategies—such as transparent vesting schedules, dedicated community reserve pools, and real-time governance dashboards—to align commercial viability with community trust and ensure a more equitable, sustainable Web3 future.

Token allocation is the strategic process of distributing a web3 project’s digital tokens—cryptographic assets, either fungible (e.g., ERC-20 tokens) or non-fungible (e.g., NFTs), built on blockchain technology—among stakeholders to foster the project’s ecosystem and objectives. These stakeholders typically include the founding team, who receive tokens as compensation for development; investors, such as venture capitalists or early backers, who fund the project; and the community, encompassing contributors like developers, testnet users, or supporters who engage through governance or promotion. The allocation process, often outlined in a project’s whitepaper or tokenomics model, determines the percentage or fixed amount of the total token supply each group receives, frequently incorporating vesting schedules to balance immediate needs with long-term stability.

Tokens are pivotal in web3 ecosystems, driving three core functions: governance, contributor rewards, and funding. They empower decentralized governance by granting voting rights in DAOs, allowing community members to shape project direction. Tokens also incentivize participation by rewarding contributors—such as testnet users or NFT minters—for their efforts, fostering loyalty and network effects. Additionally, tokens fund development through IDOs, private sales, or public offerings, securing resources for innovation and growth. Strategic allocation is thus a cornerstone of project success, as it aligns stakeholder incentives and upholds web3’s decentralized ethos. However, as seen in cases like Privasea and Zora, misaligned allocations can erode trust, making ethical considerations paramount.

Allocation Decision:

Privasea, a decentralized privacy-preserving AI project, allocated a significant portion of its $PRAI tokens to Binance Alpha for an IDO or airdrop during its token generation event (TGE) in May 2025. Social media posts estimate Binance received 20 million to 40 million tokens, with one user noting that 4% of the supply, drawn from the team’s allocation, was directed to Binance. Backed by $10.5 million from Binance Labs and others, Privasea aimed to leverage Binance’s global reach for market visibility. The “Privasea LoyalDrop,” announced on May 14, 2025, targeted over 750,000 wallets, including ImHuman App users and DeepSea Testnet node operators, offering a tiered claiming schedule (50% at TGE, with bonuses for delayed claims). However, the Binance allocation overshadowed community rewards, as early adopters perceived their share as diminished.

Community Backlash:

The Binance-heavy allocation sparked outrage, with comments like “Team + Binance > Community” dominating the LoyalDrop announcement’s replies. Testnet users, who ran nodes or participated in beta testing, felt their efforts were undervalued. @Su_Porsche on X lamented, “Privasea completely ignored their testnet users who actually supported the project early on,” accusing the project of prioritizing Binance Alpha listing over community loyalty. @obaatobatele called it a “scam project,” criticizing the forced five-year claiming structure and Binance’s preferential treatment. Users like @PHEMMYGRAM highlighted poor communication, citing a broken eligibility checker, while @leebelFounder urged labeling Privasea a scam. T

While in the Privasea’s Discord server,

These reactions reflect a sense of betrayal, as contributors who incurred costs (e.g., node setup) received minimal rewards compared to Binance Alpha participants.

Allocation Decision:

Zora, an NFT marketplace protocol built on Base (Coinbase’s layer-2 blockchain), launched its $ZORA token on April 23, 2025, with a retroactive airdrop distributing 1 billion tokens (10% of the 10 billion total supply) to 2.4 million eligible addresses based on platform activity from January 2020 to April 2025. However, the tokenomics revealed a skewed distribution:

• 65% of tokens were allocated to insiders (18.9% to the team, 20% to reserves, 26.1% to investors), leaving only 35% for the community (10% for airdrops, 20% for community initiatives, and 5% for liquidity).

• Binance Alpha played a prominent role, listing ZORA and offering an airdrop of 4,276 tokens to users who spent at least $50 on Alpha between March 22 and April 20, 2025, a move that favored newer or speculative participants over long-term contributors.

• This allocation, coupled with the token’s lack of governance or utility (marketed as “for fun only”), sparked significant controversy, leading to the emergence of the #zorascam hashtag on X.

Community Backlash

Zora’s airdrop was met with intense criticism from testnet users and NFT ecosystem participants who felt their early contributions were grossly undervalued.

The #zorascam hashtag gained traction as users shared grievances, with @LaniakeaPh calling Zora a “garbage project” and accusing it of scamming users. Specific complaints centered on meager airdrop rewards: one user reported spending $258 (~0.07 ETH) on platform interactions but receiving only $0.99 worth of ZORA (38.49 tokens), a 99.61% negative ROI, while another spent over $1,000 in gas fees for just $4 in tokens. Long-term contributors, such as those with over 2,000 transactions or holding 100 Zora NFTs, received less than $1, fueling perceptions of betrayal.

Dune Analytics revealed that top addresses claimed 36.9% of airdropped tokens, averaging $92,000 each, while the average user received only $37 (1,571.1 ZORA), highlighting a stark disparity.

Binance Alpha users, in contrast, secured significant allocations with minimal platform engagement, prompting accusations of insider favoritism and “ghost allocations” for wallets with little on-chain activity. The token’s 63% price drop post-launch (from $0.0466 to $0.0172) further amplified community anger, with users feeling “backstabbed” by Zora’s leadership for prioritizing insiders and commercial partners.

The allocation decisions by Privasea and Zora ignited anger due to three core issues: perceived betrayal, reduced rewards, and a shift toward marketing priorities.

• Perceived Betrayal: Early adopters, who invested time, effort, and resources (e.g., testnet participation for Privasea, NFT minting for Zora), expected substantial rewards as promised by web3’s community-centric ethos. Privasea’s allocation of millions of tokens to Binance Alpha, despite its LoyalDrop, and Zora’s 65% insider allocation betrayed these expectations, leading to sentiments like “scam project” and #zorascam.

• Reduced Rewards: Testnet users and early contributors received disproportionately small allocations compared to Binance Alpha participants or insiders. For Privasea, testnet users felt sidelined by the 20-40 million tokens allocated to Binance, while Zora’s average airdrop of $37 paled against top addresses’ $92,000 claims, underscoring inequity. This disparity fueled frustration, as contributors incurred costs (e.g., gas fees, node setup) without commensurate returns.

• Shift Toward Commercial Priorities: Both projects’ partnerships with Binance Alpha prioritized market liquidity and brand visibility over community loyalty. Privasea’s $10.5 million Binance-backed funding and Zora’s listing on Binance Alpha signaled commercial motives, alienating users who viewed web3 as a rejection of centralized control. This shift was seen as a departure from decentralization, with Privasea accused of turning into a “shitcoin” and Zora criticized for enabling “pump-and-dump” schemes.

Token allocation raises questions of fairness, particularly whether early adopters are justly rewarded for their contributions. Privasea’s testnet users and Zora’s NFT minters incurred significant costs (e.g., node setup, gas fees) but received minimal tokens compared to Binance Alpha or insiders. Prioritizing commercial partners over contributors risks alienating the community, undermining web3’s ethos of equitable participation. Ethical allocation should ensure rewards reflect effort, fostering loyalty and engagement.

Transparency is a core web3 value, yet Privasea and Zora faltered in disclosing allocation plans. Privasea’s opaque Binance allocation and Zora’s unclear airdrop criteria fueled distrust. Ethical projects must publish detailed tokenomics upfront, engage in open dialogue, and address community concerns promptly. Transparency builds trust, mitigating accusations of favoritism or hidden agendas.

Unethical allocations erode community trust, reducing participation and harming project viability. Privasea’s “scam” label and Zora’s #zorascam hashtag damaged their reputations, potentially deterring future contributors. Trust is the currency of web3—without it, projects struggle to maintain adoption or resilience. Ethical allocation, balancing community and commercial needs, ensures long-term success by sustaining engagement and credibility.

The backlash faced by Privasea and Zora over their Binance Alpha token allocations highlights the need to balance community engagement with marketing strategies in web3 projects. Ethical token allocation fosters trust and aligns community loyalty with marketing goals, such as liquidity and visibility, to ensure sustainable growth.

Projects should allocate 20-30% of tokens to community contributors, like testnet users or NFT minters, to reward early efforts. Privasea’s 4% Binance allocation overshadowed testnet rewards, while Zora’s 10% airdrop favored insiders (65% of supply). A fairer split, like Uniswap’s 15% retroactive airdrop, could have prioritized Privasea’s node operators or Zora’s long-term minters, countering perceptions of commercial bias. Allocating tokens to DAOs for community-led initiatives further ensures marketing partnerships, like Binance listings, reflect collective priorities.

Empowering communities through DAOs gives contributors a say in allocation and marketing decisions. Privasea could have used a DAO to vote on Binance’s 20-40 million token share, while Zora’s governance-less $ZORA token fueled #zorascam accusations. Incentivized programs, like bounties for bug reporting or X promotion, engage communities while amplifying marketing, turning contributors into advocates.

Clear, early disclosure of tokenomics prevents distrust. Privasea’s opaque Binance allocation and Zora’s unclear airdrop criteria sparked backlash. Publishing detailed whitepapers, as Optimism did for OP, and regular X updates can align expectations. Addressing issues, like Privasea’s broken eligibility checker, via AMAs builds trust and supports marketing narratives.

Marketing partnerships with Binance Alpha must benefit communities. Privasea could have matched testnet rewards with Binance’s airdrop, while Zora’s 4,276-token Alpha airdrop could have included NFT minters. Using partnership funds to subsidize costs (e.g., Zora’s gas fees) and vesting insider tokens signal long-term commitment, preserving community trust.

Equitable, transparent strategies uphold web3’s fairness principles while driving adoption. Engaged communities amplify marketing through advocacy, as Uniswap’s airdrop showed, unlike Zora’s 63% price drop. Privasea and Zora’s controversies highlight the cost of imbalance—damaged reputations and lost trust. By integrating community interests into marketing, projects build resilient ecosystems that thrive on shared success.

Key Citations:

• Privasea LoyalDrop Announcement

• Privasea Community Backlash

• Zora Criticism #zorascam

• Zora Airdrop Analysis

• Privasea User Complaints

• Zora Tokenomics Critique