With EigenLayer having announced its EIGEN token yesterday, I’d like to update you with my thoughts and what I plan to do with my allocation. (This is a follow-up to my December article where I explained why I was targeting an airdrop from EigenLayer and, simultaneously, Swell.)
Key Takeaways
- The announcement of the EIGEN token was justifiably met with heavy backlash.
- These were the main sources of criticism: (i) EIGEN being non-transferable initially; (ii) many users not qualifying for the stakedrop due to geo-restrictions; (iii) poor communication; and (iv) token allocation weightings.
- I am disappointed in this announcement. It leaves EigenLayer vulnerable to competitors and its tarnished reputation will likely cap the token’s potential upside for some time.
- Provided this remains the team’s only hiccup, I plan to keep 100% of my stakedrop and stake it to EigenDA and other AVSs once they launch.
Contents
What Happened?
Yesterday, the newly formed Eigen Foundation announced the EIGEN token. Included in the announcement were details of a so-called ‘stakedrop’, which the foundation described as “an airdrop designed for EIGEN staking.” (Separately, Eigen Labs published a 43-page paper describing the structure to the EIGEN token.)
About the EIGEN Stakedrop
The stakedrop spans multiple seasons. Season 1 started last June (i.e. when EigenLayer enabled restaking on mainnet) and ended on March 15. Season 2 is already underway and does not yet have an end date.
Of the total initial supply of EIGEN, 5% (83.68M) was allocated to Season 1. More specifically, Phase 1 got 4.54% (75.91M) and Phase 2 got 0.46% (7.77M). Altogether, 15% of supply has been set aside for stakedrops, including Season 1.
To see your claimable amount of EIGEN, go to the following website: https://claims.eigenfoundation.org/
For more information on the stakedrop, read the below X post from the Eigen Foundation or these FAQs.
Widespread Criticism
This announcement was nothing short of controversial, with the project receiving backlash from users and non-users alike. Below are the most common sources of criticism that I saw.
- Non-transferable tokens: Recipients of the Season 1 stakedrop will not be able to transfer their EIGEN for an unspecified period. The team argues this initial non-transferability is necessary for security purposes. (It also may be an attempt to mitigate regulatory risk, as lawyer Jake Chervinsky explains.)
- Geo-restrictions and VPN block: EigenLayer users from U.S., Canada and several other countries are ineligible for the airdrop, and the use of VPNs is prohibited. While this is common for airdrops, it is understandable that users from these countries feel misled given they were able to freely use EigenLayer.
- Poor communication: The well-resourced Eigen Labs team failed to effectively communicate certain details related to the stakedrop. (The above X post was published as a response to widespread confusion caused by the announcement.)
- Allocation weightings: As mentioned, only 15% of the initial EIGEN supply is allocated to stakedrops, with just one-third going to the earliest users. This is contrast to 55% of supply going to Eigen Labs investors and early contributors, who are subject to a three-year vesting schedule with a one-year cliff. (Call it clutching at straws, but it’s at least positive that these stakeholders will not benefit from inflation, as per yesterday’s announcement.)
My Take: Not Angry, Just Disappointed
I was disappointed with yesterday’s announcement as it inflicted substantial damage on the EigenLayer brand. Once EIGEN trading goes live, I expect that this tarnished reputation will cap the token’s upside potential for quite some time.
Perhaps more concerning is the fact that EigenLayer’s dominant position in the fast-growing restaking sector is suddenly vulnerable. I’d be shocked if competitors such as Karak and Babylon are not talking about juicing up their own incentive programs right now.
While the team seemingly has their reasons for constructing the stakedrop like they did—not to mention the feature-limited mainnet release a few weeks ago—part of me questions whether other pressures forced the launch of EIGEN. (Hint: Think of when these one-year cliffs will expire and then consider that most people expect this bull market to end at some stage in the first half of 2025.)
Speculation aside, ultimately, this is EigenLayer’s first hiccup. Therefore, I’m backing them in to overcome their reputational damage and execute rolling out EigenLayer as the leading restaking protocol on Ethereum.
I intend to hold 100% of my EIGEN allocation and stake it with EigenDA and more AVSs once they launch. At this stage, I’ll look to sell most or all of my EIGEN later in this bull market.
(Stay tuned for more coverage of EigenLayer! We plan to add it to The Shift List shortly after the token starts trading.)