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5 reasons why e-beggars aren’t happy with EigenLayer’s airdrop
Published April 29, 2024 at 7:04 pm EST.
The highly anticipated air launch of EigenLayer, presented on Monday, has already come under scrutiny.
The plan governing the release of EigenLayer’s token, EIGEN, has been criticized for a number of its provisions, including preventing token holders from transferring EIGEN after claiming the tokens. Others took issue with the percentage allocated for the community air drop.
EigenLayer is the second largest decentralized financial protocol by total value locked (TVL) and is known for retaking. Questions around the The potential impact of the airdrop on Ethereum circulated on Monday.
EIGEN’s total supply is set to exceed 1.67 billion tokens. This is not a fixed supply, meaning additional tokens may be issued after launch.
Of these, 29.5% is reserved for investors and 25.5% dedicated to early contributors. The rest is allocated to three community segments.
Here are five reasons why e-beggars are angry about all this.
1. EIGEN cannot be exchanged and will not initially be transferable
While early adopters of EigenLayer will be able to claim their tokens on May 10, they will not be able to transfer EIGEN until an undisclosed date.
That’s because the Eigen Foundation, set up to oversee the launch, said so. More specifically, they said they had “goals” to achieve before allowing EIGEN to trade freely.
The first involves holding lengthy community discussions designed to solicit feedback on the token’s design, as well as implementation parameters.
The Eigen Foundation wants key payments and reduction features to be “well established and understood,” before EIGEN becomes transferable.
“We believe this approach will best support the long-term growth and maturity of the EigenLayer ecosystem,” the foundation says he wrote.
Community members were not happy. The lack of transferability means that EIGEN cannot be exchanged, once again, indefinitely.
2. Imperfect snapshot timing
EigenLayer conducted a snap vote on March 15 to determine which addresses will receive an allocation. A self-proclaimed crypto currency speculator, named @GarrettZ on X, called the snapshot date is “a disappointment”.
Some were upset about the timing of the vote because e-beggars wanted points earned after March 15 to be included in the season 1 airdrop count. That said, points earned after March 15 will be counted for subsequent seasons.
3. Linear casting favors whales
EigenLayer’s airdrop follows a linear distribution model. This typically means that the percentage of a user’s total points corresponds directly to her share of the community’s initial distribution. For example, if a user has earned 10% of all points, that user will receive 10% of all tokens for the initial airdrop.
In his documentation, EIGEN’s linear allocation was to prevent sybil attacks, which refers to a single person using many programmatic addresses and bots to receive an outsized airdrop allocation. The Foundation learned that many restakers would not receive “a significant amount of EIGEN” due to the linear distribution, and as a result, “~1% of the total Season 1 allocation was dedicated to establishing a minimum of 10 EIGEN per the restakers”. “
However, some are unhappy with EigenLayer’s linear deployment model because it does not provide special treatment for early adopters. A brand new portfolio could have deposited $1 million just before the March 15 snapshot date and would theoretically have accumulated more points than small investors, who had deposited months earlier.
“Linear allocation for small users is terrible,” wrote one user on EigenLayer’s Discord, who goes by @sentosa0053. Another X user who goes by the name @JeanLucBBX She said that the linear model “basically makes 1,000-2,000 Eigen stakers happy at the expense of 100,000 who will receive peanuts.”
EigenLayer is not a pioneer in using a linear model. Kamino and Parcl, both Solana natives, had previously adopted the approach, and even smaller users had expressed dissatisfaction with their distributions.
4. Confusion from documents
EigenLayer’s announcement coincided with the Foundation’s release of documents clarifying the specifics of the airdrop. The documents fueled the confusion.
The documents state that people who have interacted with EigenLayer-related Defi positions, such as decentralized financial protocol Pendle, will not be eligible for phase one of EigenLayer’s first airdrop season.
As a result, crypto users, such as early Pendle adopters, expressed outrage, thinking they were left out of EigenLayer’s first season of airdrops. However, the phases and seasons are not the same, said Brianna Montgomery, head of strategy at Eigen Labs, the development company behind EigenLayer, on Telegram. While Pendle users are excluded from phase one, they are not excluded from season 1 entirely and will receive an airdrop allotment in phase two.
While both describe periods of time, EigenLayer seasons include phases, making the seasons broader.
“Just got back online and trying to figure out what’s happening to $EIGEN Points earned via DeFi protocols. Communications documents are chaotic here. Even the DeFi protocols themselves appear to be clueless and taken by surprise. Looks like the death of the metapoint, he wrote Aylo, the founder of the crypto research collective Alpha Please.
5. GCR’s EigenLayer retires the day after the snapshot
Between December 22 and January 3, a wallet identified by blockchain analytics firm Arkham Intelligence as belonging to pseudonymous trader GCR filed 3,904 wBETH in EigenLayer smart contract for Binance liquid staking token. The deposit is worth approximately $12.8 million at current market prices.
On March 8, the address queued its withdrawal from EigenLayer. On March 16, a day after EigenLayer took its snapshot, the request was successful and the address withdrew 1,924 wBETH, data from blockchain explorer Etherscan Shows.
“Oh wow, what a coincidence that GCR is retiring from @EigenLayer the day after the shot was taken,” wrote a restaker on EigenLayer’s Discord.