EigenLayer Crypto's Biggest Project This Year Removes LST Caps, Unpause Restaking Deposits

Business

EigenLayer Airdrop Faces Backlash Over Token Lockup – Crypto News

Published

1 year ago

May 1, 2024

Dripp

The unveiling of the EigenLayer airdrop details has ignited a mix of applause and intense scrutiny. The plan outlines a distribution of 45% of 1.67 billion tokens to the community. This includes an initial season airdrop of 5%, targeting protocol stakeholders. Yet, restrictions on token transferability have sparked widespread concern and debate.

EigenLayer has stated that upon launch, tokens will be non-transferable for several months. This measure aims to promote decentralization and foster consensus on the token’s utility and governance. Despite these intentions, the move has led to significant dissatisfaction among airdrop recipients.

Critics argue that these restrictions may limit the immediate utility of the tokens. Additionally, comparisons have been drawn to the Starknet airdrop earlier this year, which encountered similar controversies regarding token lockup and release schedules.

EigenLayer Airdrop Strategy Sparks Widespread Discontent

EigenLayer’s allocation strategy further complicates the reception of the airdrop. David Hoffman, Co-Owner of Bankless, has defended the plan on social media platform X. He noted that the 15% total supply earmarked for community airdrops is 50% higher than the industry standard. Yet, dissatisfaction remains among those anticipating more flexible access to their tokens.

The exclusion of certain countries, notably the U.S. and Canada, along with blocks on VPN users, has intensified frustrations. These measures, intended to comply with regulatory frameworks, have nonetheless led to accusations of inconsistency in platform access versus airdrop participation.

Additionally, the airdrop’s complex structure and concepts, like intersubjective forking, have led to confusion and debate among potential recipients. This has been especially pronounced among Pendle users, who were initially thought to be excluded.

Airdrop Policies Cause Ethereum Market Turbulence

The market response to the airdrop and surrounding controversies has been palpable. Following the announcement, Pendle’s market value saw an 11.8% decline. Moreover, the broader Ethereum network on which EigenLayer operates has experienced significant turbulence.

Reports from Dune Analytics and DefiLlama indicate a surge in Ethereum withdrawals. Approximately 150,000 ETH, valued at around $457 million, have been withdrawn. This mass exodus highlights the broader market’s reaction to the airdrop’s policies and the potential implications for Ethereum’s stability.

While EigenLayer’s airdrop aims to enrich community engagement through substantial token distribution, the accompanying restrictions and exclusions have stirred significant debate and dissatisfaction.