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Eigen Layer brings new weekly programmatic rewards, which will inflate the circulating supply of EIGEN tokens by 4%. The incentives will be retroactive from August 15 and will be claimable from October 8 onward.
Eigen Layer, the leading Ethereum re-staking protocol, is introducing another token incentive. The programmatic incentives will be rewarded to qualifying stakers and the operators they delegate with. Eigen Layer will work to align security services, strengthening partnerships between delegators and operators.
The Programmatic Incentives will have a year-long horizon, with a target distribution of 66,945,866 EIGEN. The incentives will be equal to 4% of the total EIGEN supply of 1,673,646,668 tokens.
The bulk of incentives will go to ETH and LST stakers and their operators, with the rest reserved for EIGEN staking and the selected Operators. The eligible Operators must be registered with at least one Actively Validated Service (AVS).
Eigen ecosystem moves to ongoing incentives
The Eigen ecosystem held some of the most prominent, long-running airdrop campaigns, which took months between the activity and the allocation of actual tokens. The delays also sparked talks of uncertain allocations.
The new programmatic incentives aim to bring predictable rewards, tied to the underlying activity. The weekly incentives also aim to forge connections between all Eigen participants, while subsidizing the re-staking marketplace.
The current incentive is still in V1, with more technical details coming in the next few days. The distribution will be relatively transparent – the EIGEN rewards will be proportionate to the amount of staked assets.
Operators will receive a predetermined, predictable incentive of 128,742 EIGEN each week. The remaining 90% of rewards will go to stakers. In the end, aligned incentives will drive traffic to AVS, the apps, and features built on Eigen Layer. The initial distribution can go through a series of updates to change the balance of EIGEN tokens distributed.
The Eigen ecosystem has 1,686 active operators, of which 526 are affiliated with EigenDA, the most widely used service. EigenDA is the main app on the platform, offering more bandwidth for decentralized apps.
The airdrops and stakedrops will be the main tool for distributing EIGEN until May 2025. After that, the initial VC backers will start receiving their tokens. It is still uncertain when the EIGEN tokens will become fully movable and tradable. For now, the project aims to build up demand for AVS, while setting up expectations for EIGEN price discovery.
Eigen Layer is also a low-float project, with only 6.67% of the tokens unlocked. The tokens will become active and trade after the crypto market has already absorbed several low-float tokens.
Eigen Layer still seeks valuation
Eigen Layer turned into the top protocol on Ethereum during the 2024 bull market. At the peak, the protocol locked in $22B in value. Currently, the lower ETH price and outflow of users decreased the value locked to $11.09B.
The protocol hosts a total of 14 AVS, similar to DeFi or Web3 projects. The difference for AVS is that they rely on staking for their security. The most widely used AVS is EigenDA, or the data availability layer.
The Eigen ecosystem now has a very well-developed layer of delegators and operators, but much fewer AVS.
The series of airdrops and incentives also raises the question of the eventual EIGEN token trading. The initial price per token may range from $12 to $42, depending on the hypothetical valuation. Eigen Layer is still seen as a potential unicorn, with a valuation of at least $1B. On the higher range, the best-case scenario sees a valuation of $3.5B and $42 per token.
The Eigen Layer ecosystem of tokens is already valued at more than $44B, spearheaded by Pendle, Ether.fi, and Ethena. However, most of the value comes from wrapped ETH or liquid staking tokens, with still a small influence on the actual projects. So far, Mantle and Celo are among the biggest projects to use Eigen Layer for security. Despite this, the network still has to deal with technical issues and fragmented liquidity.
Eigen Layer has been supported by VC backers, including the influential Andreessen Horowitz fund, also active with Uniswap. The project was ambitious in its goals and raised $164M for its ecosystem. Backers included Polychain Capital, Blockchain Capital, and Coinbase Ventures.
Cryptopolitan reporting by Hristina Vasileva.