The completion of the EigenLayer season one airdrop generated unexpected controversy as participants complained about the limited amount of tokens that were distributed during the campaign. More so, the fuss had a significant impact on the restaking protocol shortly after the completion of the distribution effort.
EigenLayer is a pioneering protocol on Ethereum that champions the security of decentralized solutions by leveraging its network of validators. Through its restaking initiative, the protocol ensures the security of various decentralized applications, supporting developers to seamlessly build and protect their platforms.
The restaking system of EigenLayer permits validators to use their already-staked ETH to protect decentralized protocols beyond the Ethereum base layer. Thanks to this innovation, EigenLayer offers an extra layer of security for decentralized solutions while rewarding validators.
Impact of the Airdrop Campaign on EigenLayer
After the distribution of the token in mid-September 2024, EIGEN struggled for price stability as the token recorded a sharp decline of 24%, dropping from $4.58 to $3.48. Similarly, the market cap of the project also dropped from about $800 million to $686 million.
The protocol disrupted the cryptocurrency market in 2024 when it introduced its restaking concept that allows holders of Ethereum to delegate their holdings to other pools and make a profit. As part of the participation criteria, EigenLayer demanded that participants stake their Ethereum on the platform before March 15.
Furthermore, the project intended to carry out a linear distribution of the EIGEN tokens based on the points they accumulated before the snapshot. Considering the popularity and market size of EigenLayer, participants of the season one airdrop campaign were hopeful to receive more EIGEN during the campaign.
However, despite the complaints about the airdrop campaign, EigenLayer has recorded tremendous growth as a result of the initiative. On the snapshot date, investors already staked 3.14 million ETH, at the moment, investors have committed 4.86 million ETH to the protocol.
Presently, EigenLayer is the third-largest decentralized finance platform with a total value locked of $10.86 billion as per DeFiLlama. By that, the protocol became the second-largest DeFi app behind the popular liquid staking platform Lido.
Downsides of the Distribution
One of the concerns about the airdrop campaign is the inadequacies in the distribution of the EIGEN token. The project adopted a linear distribution system that gave more tokens to participants with high stakes. Simply, community members faulted how the project rewarded participants based on the size of their staked tokens.
While the EigenLayer airdrop favored whales, it left most participants with a lesson that in the end, their active participation may amount to nothing.
Likewise, another downside that has raised eyebrows is how participants based in the United States couldn’t claim EIGEN tokens from the campaign. Despite EigenLayer having a headquarters in the United States and backing from investors based in the country, the protocol didn’t cover U.S.-based participants.
Further, enthusiasts bemoaned how the protocol accepted stakes from U.S. investors and refused to set up restrictions that could prevent them from accessing the platform. Another dent on the campaign is the vesting schedule policy that makes EIGEN tokens received from the camping non-transferable for a certain period.
Consequently, the policy is going to leave investors hooked on the tokens, stopping them from trading the tokens before the liquidity event. This policy is much to the detriment of participants due to the recent freefall of the token, which may wipe out their little profit.
ConclusionÂ
Among participants, the EigenLayer airdrop campaign didn’t meet the expected standard as most community members lamented about the distribution. Nevertheless, the project team intends to distribute more tokens at intervals which gives more room for community members to earn free cryptocurrencies.
The team allocated 15% of the 1.6 billion EIGEN token total supply to the distribution campaign, supporting the initiative to run across various seasons. Similarly, the second season is set to commence following an update from EigenLayer.
The second season presents another chance for participants to stake and earn more EIGEN as the project team already allotted 5% of the token’s total distribution to the new campaign. Hence, the outcome already indicated that participants should lower their expectations as the distribution system is favorable mostly for big-bag investors.