Ethereum staking protocol Eigenlayer released the white paper of its proposed new token EIGEN on April 29, and officially launched the EIGEN token and airdrop plan in the early morning of April 30. The EIGEN airdrop program will officially open for applications on May 10. So, who is eligible? How much is the EIGEN coin received approximately worth?
In this article, we will introduce all the information about Eigenlayer’s token EIGEN.
As Ethereum transitions from a Bitcoin-style Proof-of-Work (PoW) consensus mechanism to a Proof-of-Stake (PoS), it now allows users to stake ETH for block validation purposes.
Cryptocurrency participants earn rewards by staking ETH, which involves locking a certain amount of ETH (minimum 32 ETH).
EigenLayer is an Ethereum-based protocol that introduces a new primitive in cryptoeconomic security, namely restaking. This primitive enables users to reuse their ETH on the consensus layer and extend cryptoeconomic security to other applications on the network.
Users who natively stake ETH or use Liquid pledge tokens (LST) can choose to join the EigenLayer smart contract to re-stake their ETH or LST (stETH and rETH, etc.) and receive additional rewards.
Simply put, the EigenLayer protocol allows users to re-stake their ETH and receive rewards from multiple protocols.
Currently, EigenLayer has become the core project of the re-staking track. The project, which attracted investment from Binance Labs and a16z earlier this year, has seen huge growth in staked ether (ETH). Its TVL has surged over 2,000% in less than two months and will become the fifth largest DeFi protocol by 2024.
The Ethereum Virtual Machine (EVM) enables dapps to take advantage of main network security. However, not all dapps can be deployed via EVM. Many applications, such as bridges, oracles, decentralized exchanges (DEX), and data availability protocols, must operate as Active Validation Systems (AVS) by running full nodes.
Thanks to EigenLayer, these AVS can benefit from the same level of security without the need for validators, which greatly reduces costs and increases the reliability of these dapps. It's as if EigenLayer outsources Ethereum's security to non-EVM protocols, thereby strengthening the Ethereum ecosystem.
The staked ETH is repurposed to provide verification services for other dapps. EigenLayer achieves this through an opt-in process where users approve new cuts on top of a consensus layer in exchange for larger rewards.
According to the announcement, EIGEN will serve as a universal inter-subject work token, bringing the concept of "social consensus" into the on-chain economy. When failure cannot be mathematically proven, you can use this new consensus and participate in the verification system by staking EIGEN tokens.
At the same time, users can still re-stake ETH on EigenLayer, which in turn will provide verification capabilities to protect the security of the Active Verification Service (AVS).
Bruno Moniz, a blockchain engineer at Brazilian digital bank Inter, shared on X that social consensus makes it feasible to innovate services such as oracles, data availability layers, and the integration of artificial intelligence in smart contracts.
ETH is used to prove objectively proven failures, while EIGEN can be used to prove failures that require social consensus. Together they form the basis of "verifiable and open universal digital goods". Additionally, as with Ethereum staking, validators’ EIGEN may be slashed if harmful behavior is detected.
It is worth noting that EIGEN tokens are not transferable and the only action available to users is to stake their token holdings.
According to the EIGEN coin white paper published by EigenLayer on GitHub, the total supply of EIGEN planned to be issued is 1.67 billion. Of this, 15% of the supply will be used for staking, another 15% is reserved for community programs, and a similar amount (15%) is allocated to EigenLayer ecosystem development.
However, according to Eigen Labs’ blog post on April 29, we can further learn that 45% of the EIGEN supply will be allocated to the community, and this share will be further broken down into airdrops (15%) , community programs (15%) and ecosystem development (15%).
Meanwhile, the Eigen Foundation has designated 29.5% of the supply to investors and 25.5% to early contributors. Cryptocurrencies allocated to investors and early contributors have a vesting period of 3 years, with all being locked in the first year.
According to the announcement issued by EigenLayer on April 30, the Eigen Foundation will launch the EIGEN token in May. In addition, airdrops for the staker community on EigenLayer will also be online.
The first season of the EIGEN airdrop will give the community the opportunity to receive 5% of the token supply, and this allocation will be distributed to staking participants captured in the March 15, 2024 snapshot. According to DefiLlama, users have deposited more than $15.7 billion on the ETH re-mortgage platform since its launch in June last year. The next tranche, the remaining 10%, will come online 30 days after the end of the first phase claims window.
Currently, the inquiry page for the airdrop quota for the first phase of the first quarter has started. Users can go directly to the official website to check the airdrop shares they can obtain. In addition, the airdrop application period is expected to be from May 10 to September 7.
As for the follow-up second season and potential airdrop plans for more seasons, Eigenlayer only mentioned that the second season is in progress. Users need to pay attention to official channels to learn the specific information that will be announced in the future.
Please follow the EigenLayer Foundation official account @eigenfoundation for more information in the coming weeks.
In conjunction with the Eigen token, the project is introducing a new cryptoeconomic security system called Inter-Subject Fork, designed to Ethereum recollateralization plays a complementary role. This mechanism is designed to address inter-subject errors, i.e. malicious behavior that cannot be immediately detected on the chain, such as data withholding in oracles built on top of EigenLayer.
The inter-subject fork will be implemented separately from EigenLayer’s original plan to cut out ETH re-tryers for objectively identifiable on-chain behavior. According to EigenLayer, this will remove unnecessary burden on Ethereum validators.
As the first token of the core project of the re-staking track, the valuation of EIGEN has attracted much attention.
Currently, Aevo has listed EIGEN in pre-market trading, with a temporary price of $9.94 and a 24-hour trading volume of $128,706.68. This may serve as a potential reference.
However, EIGEN has just joined Aevo not long ago, and its future performance still needs to be observed. In addition, with the EIGEN airdrop and unlocked functions, its real performance deserves more attention.
EigenLayer provides some key advantages for Ethereum-based Web3 applications, such as enhanced security and capital efficiency. It also allows stakeholders to earn higher returns.
However, the new rehypothecation concept also brings some risks. Ethereum co-founder Vitalik Buterin also warned about these risks, some of which are:
Despite the risks, EigenLayer is growing rapidly, expanding its ecosystem by attracting TVL and developing new features and use cases.
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