Eigenlayer releases EIGEN white paper, bans airdrop for US users

Christopher Roark4 hours agoEigenlayer releases EIGEN white paper, bans airdrop for US usersThe EIGEN token will be used to form consensus around data that is off-chain but easily verifiable, such as whether someone won a bet or adequately stored data.1622 Total views3 Total sharesListen to article 0:00NewsOwn this piece of crypto historyCollect this article as NFTJoin us on social networksThe Ethereum staking protocol Eigenlayer released a white paper on April 29 for its proposed new token, EIGEN. The token will be used for apps that rely on intersubjective agreement, such as prediction markets, storage services, and gaming virtual machines, the white paper stated. Several jurisdictions, including the United States and Canada, will be excluded from the upcoming airdrop.

Eigenlayer is a blockchain network that uses staked Ether (ETH) as its native coin. Users who have staked Ether on Ethereum can “restake” it to Eigenlayer and earn additional staking rewards by validating transactions on both networks. The developers claim that this solution is more secure than using a separate token, as it allows Eigenlayer to inherit the security of Ethereum instead of needing to build trust from the ground up.Eigenlayer official website. Source: Eigenlayer.

According to the new white paper, staked Ether will continue to be used to form consensus around data that is verifiable on-chain, such as the validity of transactions.

Related:What is EigenLayer? Ethereum’s restaking protocol, explained

The paper stated that some data cannot be verified as true or false on-chain, but can still be easily verified by real persons. “1 [Bitcoin] BTC = 1 USD [US Dollar]” is one example of such a statement, which can be easily verified as false using widely available off-chain data. Eigenlayer claimed that the new EIGEN token will be useful for forming consensus around these kinds of statements, which it calls “high concordance with intersubjectively attributable faults.”

EIGEN was built on previous work done by Augur, which created the REP token to recognize intersubjective agreements, the paper stated. However, it also claimed that REP was built specifically for prediction markets, whereas EIGEN is intended to be a “universal” intersubjective agreement token having applications beyond this one use-case. In addition, the team claimed that the EIGEN token can be isolated from decentralized finance (DeFi) apps when it forks, can aid in measuring the cost of social consensus, and can compensate users who lose EIGEN due to faults.

The team claimed that these attributes make EIGEN uniquely suited to be a “universal work token” for tasks that are not objectively attributable. It listed a number of possible applications that the token could be used for, including prediction markets, storage services, cloud microservices, gaming virtual machines, order-matching engines for exchanges, databases, artificial intelligence (AI) training, and other uses.

According to Eigenlayer documentation, 5% of the EIGEN total supply has already been allocated to current users who have restaked ETH through the network. These tokens were set aside after a snapshot was taken on March 15. Additional tokens will be given out to participants in “Season 2,” which began immediately after the snapshot. The team has not announced when Season 2 will end.

After the paper was published, crypto trader and X user DeFi Made Easy speculated that the Eigenlayer team may be preparing to airdrop the new token to users. As evidence for this view, they posted an reported link to a “claims” webpage set up by the Eigenlayer team.

The webpage produces a 404 error when viewed from a U.S. IP address and multiple VPN server addresses located in Europe. Eigenlayer documentation notes that the United States, Canada, and several African and Asian countries will not participate in the airdrop.

On April 22, pseudonymous developer Chudnov stated that Eigenlayer may soon face a “yield crisis” as the value of the assets locked on its platform is growing faster than what is needed to secure the network. Restaking on Eigenlayer is one the largest drivers of new assets to the DeFi ecosystem, according to April 18 reports from QuickNode, and Artemis.

Update (04-29-2024 8:12 pm UTC): This article has been updated to clarify the percentage of EIGEN supply allocated to users in Season 1.

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