EigenLayer, a pivotal player in the blockchain space, has updated its documentation regarding staking practices and reward distribution in response to mounting transparency concerns from its community. The restaking protocol has recently faced scrutiny, especially after allegations surfaced that early investors could stake locked EIGEN tokens and receive unlocked rewards—information that was not clearly disclosed initially.
Transparency Issues And Community Reactions
The lack of clarity around these practices led to confusion about the actual circulating supply of EIGEN tokens, igniting fears of preferential treatment for certain investors. With the lifting of transfer restrictions on its native token at midnight ET on Monday, many in the crypto community expressed their discontent.
One community member, known as “Karl_0x,” highlighted the situation on X, revealing that a staggering 40% of all EIGEN staked tokens originated from just 13 investor addresses. This revelation left many investors feeling misled, as they believed these tokens were circulating and available for trading, which could significantly influence their investment decisions.
Research firm Kairos noted that prior to the commencement of EIGEN trading, the total expected circulating supply was about 200 million out of a total supply of 1.67 billion tokens—around 12%. However, only 85.4% of tokens were claimed during the first stakedrop, with the second season seeing an even lower claim rate of just 21.7%. As it stands, the actual circulating supply is significantly lower, at approximately 114 million EIGEN, which raises alarm bells for potential volatility in the market.
EigenLayer’s Staking Structure
In light of these concerns, EigenLayer provided further details on its staking system, which caps total annual rewards for EIGEN stakers at 1% of the initial token supply. The allocation is structured such that 25% of programmatic incentives are dedicated to EIGEN staking, while a substantial 75% is reserved for ETH and ETH-equivalent staking, aiming to ensure that non-investors also benefit from the system.
Additionally, EigenLayer clarified that while investors can stake both EIGEN and other assets, rewards for early investors remain locked for at least a year. They also emphasized that initial stakedrops excluded investors, who will only earn rewards through future programmatic incentives.
Yet, community members, such as “TardFiWhale,” voiced frustration, asserting that such critical information should have been disclosed well in advance rather than in response to public scrutiny.
Market Implications
As EigenLayer navigates this turbulent landscape, the platform remains a significant player, allowing users to stake ether to secure third-party networks and actively validated services. With over $12 billion in total value locked (TVL)—a decline from its $20 billion peak in June—the platform is still a prominent option for stakers.
Also Read: EigenLayer $EIGEN Token Surges To 229,500 Holders; $6.55M Liquidity But Faces 25% Price Plunge!
Currently trading at approximately $3.53, the EIGEN token holds a fully diluted valuation of $6 billion, according to CoinGecko. As EigenLayer aims to rebuild trust within its community, the emphasis on transparency in its staking practices and reward distribution will be crucial in shaping its future in the competitive blockchain ecosystem.
As the crypto community continues to evolve, EigenLayer’s commitment to clarity and fairness will be key in maintaining investor confidence and fostering sustainable growth in the volatile landscape of decentralized finance.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
About The Author
