EIGEN Airdrop Elicits Pushback From EigenLayer Community – Crypto News

The first phase of EigenLayer’s highly anticipated airdrop has garnered criticism from many within the project’s ecosystem.

Critics emphasized that EIGEN tokens are initially non-transferable, meaning that holders will not be able to sell their tokens. EigenLayer also copped flak for excluding liquid restaking protocols from the drop, excluding users from seven major jurisdictions including the United States and Canada, and its linear allocation of tokens.

According to the Eigen Foundation’s Monday announcement, 15% of EIGEN’s 1.67 billion token supply is earmarked for its community. Points holders from the first season of its airdrop campaign will receive 5% of EIGEN’s supply.

EigenLayer ranks as the second-largest decentralized finance protocol with a total value locked at $15.7 billion, according to data from DefilLama shows. The protocol was founded in 2021 by Sreeram Kannan, a former data science professor at the University of Washington, but did not begin accepting deposits until June 2023.

EigenLayer pioneered “restaking” on Ethereum, which allows stakers to earn additional yields by secure third-party actively validated services (AVSs) while continuing to validate Ethereum. Stakers secure Proof of Stake blockchains by operating a node to validate transactions and provide ETH as collateral that can be slashed should they misbehave.

EIGEN allocations

Since its mainnet launch last July, EigenLayer awarded points to users to restakers based on the size of deposits and how long they participated in restaking. EigenLayer is based on a linear distribution system, meaning eligible wallets receive EIGEN proportionally to the points they hold. For example, a wallet holding 100 Eigen points will receive 100 EIGEN.

EigenLayer also set aside roughly 1% of the Season 1 tokens to guarantee that each restaker gets at least 10 EIGEN.

The Eigen Foundation said it chose the linear distribution approach to prevent Sybil attacks, where an individual could use multiple addresses and bots to claim a disproportionately large share of the airdrop.

However, many users are unhappy with their token allocations.

“Honestly the linear approach is f*cking stupid,” an X user said, “Basically makes 1000-2000 Eigen stakers happy at the expense of 100k who will get peanuts.”

“Linear allocation for small user is terrible,” sentosa0053 posted in EigenLayer’s Discord.

Other users took exception with tokens initially being untransferable until an unspecified future date despite EIGEN claims going live on March 10.

The Eigen Foundation defended its decision via tweet, stating the delay allows time to ensure key features including “payments and slashing parameters” are running smoothly before EIGEN tokens become freely transferable.

Excluded users

Pendle, a yield tokenization protocol that facilitated leveraged Eigen points farming via liquid staking tokens (LRTs), was excluded from the EigenLayer’s initial airdrop phase.

Pendle’s TVL has recently ballooned to more than $4 billion, thanks in part to rampant LRT farming, with many users expecting to receive hefty EIGEN allocations.

“Let me get this straight. Pendle is responsible for a large amount of deposits to EigenLayer because of the points meta…but $EIGEN is going to rug Pendle users for season 1?” tweeted crypto_condom, a popular web3 analyst.

However, with EigenLayer’s first airdrop Season distributing tokens to eligible wallets over multiple “phases, ”TN Lee, Pendle’s co-founder and CEO, told The Defiant he expects Pendle users will receive EIGEN at a later date.

“While some users may not receive tokens in the initial phase, they may still be eligible for tokens later in the same season,” he said.

Geographic restrictions mean users from certain countries, including the U.S., Canada, China, and Russia, are barred from claiming EIGEN tokens. The foundation’s efforts to enforce these restrictions by preventing VPN users from accessing its claims portal despite having accepted deposits from those same users was also met with discontent.

“Accepting stake from those countries and not rewarding them isn’t right,” tweeted Aylo, a crypto researcher with 100,000 followers, “They took a very real risk for nothing.”

Users also pushed back against the tokens allocated to EigenLayer’s investors vesting immediately, meaning they will be able to begin selling their EIGEN from the moment the tokens become transferable.

55% of EIGEN’s supply is also earmarked for its team and investors. As such, some community members believe the airdrop was designed to benefit insiders.