EigenLayer Last Great Airdrop? Why “Life-Changing” Airdrops May Be a Thing of the Past

Key Takeaways

• EigenLayer’s latest airdrop is part of a strategy to reward early adopters.
• Critics argued that the distribution favors developers and investors disproportionately.
• The EigenLayer airdrop process involved complex criteria which has made some readjustments after backlash. 

The cryptocurrency sector was abuzz following EigenLayer’s  latest airdrop announcement, an Ethereum-based restaking platform. It revised its distribution conditions after receiving community feedback and concluded the first round on April 29.

However, the platform’s intent to compensate its early adopters and contributors is shedding light on the evolving nature of airdrops. The process is now influenced by factors like what the community considers fair amid rising geographical restrictions.

EigenLayer’s Airdrop Plan

EigenLayer , an Ethereum-based restaking platform introduces  a mechanism for handling network forks and the redistribution of funds from slashing events, ensuring that forks remain rare and validators are discouraged from attacking the protocol.

Investors and early adopters raced to get a piece of the pie after EigenLayer announced an airdrop plan. It  said  it would allocate 45% of its 1.67b tokens to the community, with a significant portion distributed through multiple seasons of airdrops. EigenLayer marked a 5% allocation for Season 1. 

15% was allocated for stakedrops, and another 15% for future community initiatives which also includes future inflation. Research and development, along with ecosystem development, will receive 15%, managed by the Eigen Foundation. Investors hold 29.5% of the supply, while early contributors own 25.5%, both subject to a three-year lock-up period with a release plan.

However, the airdrop has not been without criticism. Crypto users on X expressed concerns regarding the perceived inequality in the distribution of tokens. Critics argued that while team members and investors receive a majority of the tokens, only a small fraction is allocated to the stakers. They also criticized that these tokens are not transferable, restricting their utility and value.

The Updated Airdrop Plan

In response to the feedback from its first airdrop announcement, EigenLayer clarified that users involved with unresolved (DeFi) contracts are not penalized in the distribution  process . They explained that the allocation for the second phase of Season 1 was determined by the collective stakes of these contracts, treating them as if they were individual stakers to ensure fairness.

Based on community feedback, the foundation also allocated an additional 100 EIGEN towards gas costs to be reflected in claims made post-May 10th. The add-on of 100 EIGEN will go to over 280,000 users, making an additional 28m EIGEN. 

The foundation also clarified its lock-up policy, stating that both investors and team members will remain locked up for a year post-transferability, with a gradual release of 4% per month over three years. They aim for full decentralization by September 30th, 2024, allowing the community to vote on future transferability. Additionally, missed allocations for certain testnet users will be rectified in Phase 2 of Season 1. 

‘Life changing airdrops thing of the past‘

But as the dust settles on  EigenLayer’s airdrop, questions linger about the future of such events. With increasing scrutiny and criticism over the distribution methods and perceived ‘greed’ among developers and venture capitalists, the era of “life-changing” airdrops may be waning.

Leandro Schlottchauer, co-founder and CEO of Kuyen Labs believes, “Life changing airdrops in crypto are a thing of the past,”

The founder notes that this incentives program has been a success, highlighting that in just four months, EigenLayer saw over $13b in user deposits, more than 100,000 unique depositors, and over 4b total restaking points. He questions whether such growth could have been achieved without such an incentives program and suggests that merely distributing tokens might not have been as effective without the initial absence of a tradable token.

EigenLayer’s Token Distribution: Source: ICO Analytics

However, the founder acknowledges that not everyone is pleased with how airdrops are executed, as satisfaction with such distributions can be highly subjective. He concludes that there might be a shift towards more sustainable growth strategies in the industry.

“Community members have been divided on the core team’s plans, including the amount to be airdropped to early contributors and the limited number of jurisdictions from which users will be able to claim,” Schlottchauer added.

This is especially true considering the US has been put as a restricted  location . As per an SEC  circular , “an airdrop may constitute a sale or distribution of securities.” In other countries like India and the UK, airdrops are  taxable  under the  law . 

Airdrops are Less Lucrative 

As regulatory frameworks evolve, various tax and securities laws impose stricter rules on cryptocurrency airdrops, often making them less lucrative for recipients. Additionally, the structure of airdrops is increasingly restrictive for investors; a significant portion of the tokens is typically reserved for venture capitalists (VCs) and insiders.

EigenLayer’s  airdrop also reflects the broader challenges facing the cryptocurrency world regarding equity and transparency in token distribution.