EigenLayer, a pioneering Ethereum restaking protocol, has unveiled its long-awaited native token, EIGEN, and its distribution plan, which includes a significant allocation for ecosystem participants.
However, the announcement has sparked controversy within the crypto community, leading to a surge in withdrawal requests from the platform.
TLDR
- EigenLayer, a major Ethereum restaking protocol, is launching its native EIGEN token with a total supply of 1.67 billion tokens.
- The token distribution includes a 15% allocation for ecosystem participants, divided into multiple “seasons” or phases.
- The first season will airdrop 5% of the tokens to eligible restakers based on a snapshot from March 15, 2024, with 90% claimable on May 10 and 10% later.
- The airdrop has caused controversy due to factors like initial non-transferability of tokens, exclusion of certain countries (including the U.S. and Canada), and a perceived high allocation for investors and early contributors.
- EigenLayer has seen over 12,000 withdrawal requests in three days following the airdrop announcement, potentially reducing its $14.8 billion TVL by around $457 million.
According to the Eigen Foundation’s whitepaper, the EIGEN token will have a total supply of 1.67 billion tokens at launch.
Of this supply, 15% has been allocated for the EigenLayer community, further subdivided into stakedrops (15%), community initiatives (15%), and ecosystem development (15%).
The stakedrop, or airdrop, is set to be distributed across multiple “seasons.” In the first season, 5% of the total token supply will be airdropped to eligible restakers based on a snapshot of staking activities taken on March 15, 2024.
Eligible restakers will be able to claim 90% of their allotted tokens on May 10, with a 120-day claim window. The remaining 10% will be claimable in a second phase of the first season, scheduled for a month later.
The distribution calculation is designed to be linear, based on the amount of ether staked and the duration of the stake, with additional rewards for native restaking.
However, the tokens will initially be non-transferable, a decision EigenLayer says is intended to allow time for decentralization and community consensus on the token’s utility and governance.
12,412 withdrawals hit @eigenlayer as disappointment spreads over airdrop exclusion. TVL expected to drop by 11.6%.
What’s next for the protocol? pic.twitter.com/SxxBNwqTDE
— Cointelegraph (@Cointelegraph) May 1, 2024
While the airdrop aims to reward active participants, the announcement has sparked controversy within the crypto community.
One major point of contention is the exclusion of certain jurisdictions, including the United States, Canada, and China, from receiving the airdropped tokens. This decision is likely a precautionary measure to mitigate potential regulatory risks, but it has angered users from these regions who have contributed to EigenLayer’s growth.
Additionally, the allocation of 30% of the tokens to Eigen Labs investors and 25% to early contributors has raised concerns about potential sell-offs once the tokens become transferable, potentially impacting the token’s price stability.
The backlash has already manifested in the form of substantial withdrawal requests from EigenLayer. According to data from Dune, the protocol has received over 12,412 withdrawal requests in just three days following the airdrop announcement on April 29.
These withdrawals, which account for approximately 11.6% of EigenLayer’s unique depositors, could potentially reduce the protocol’s current $14.8 billion total value locked (TVL) by around $457 million.
The mass withdrawals suggest that a significant portion of EigenLayer’s user base is dissatisfied with the airdrop plan, potentially seeking alternative restaking platforms.
Notably, the new restaking protocol Karak has seen a 20.5% increase in TVL during the past week, fueling speculation that it could become a viable alternative to EigenLayer.
Despite the criticism, EigenLayer’s approach to the token distribution is relatively conservative, aimed at mitigating regulatory risks.
As legal experts have pointed out, the non-transferability of the tokens and the exclusion of certain jurisdictions are common practices adopted by projects navigating the uncertain regulatory landscape surrounding crypto token distributions.
