The recent launch of EigenLayer’s native token, EIGEN, has caused quite a stir in the crypto community.
While the initial hype saw the token’s price surge, concerns about transparency and token supply have quickly overshadowed the excitement.
The EIGEN token, which hit a high of $4.39 after its release, has since dropped over 20% to $3.57, raising eyebrows among investors.
The Transparency Issue
At the heart of the criticism is the lack of clear communication regarding the distribution and staking of the token.
Many community members have pointed out that a portion of the circulating supply is tied to early investors who participated in EigenLayer’s fundraising rounds, including a $14.4 million seed round and a $100 million Series A round.
These investors, it seems, have been able to stake their tokens without any lock-up restrictions.
This move has sparked concerns among retail investors, who feel that early investors may have an unfair advantage.
Much of the frustration stems from the fact that these early investors can stake their tokens to earn rewards, rewards that, according to critics, should be locked until the end of the 12-month vesting period.
This has led to comparisons with Celestia, another project that saw its token plunge 75% after a similar issue.
The Numbers Behind the Controversy
To put things into perspective, the total supply of EIGEN tokens is capped at 1.68 billion, with a circulating supply of 186 million.
Of these, around 130 million tokens are currently staked, but approximately 70 million belong to early investors who bought their tokens at a heavily discounted rate.
This has raised questions about the fairness of the system and whether retail investors are being treated fairly.
Moreover, these early investors were not initially subject to any lock-up restrictions, a fact that was only disclosed after the token launch.
As of September 30, EigenLayer updated its blog post to include this information, but for many, the damage was already done.
One investor, who goes by the handle TardFiWhale.eth, expressed on social media platform X (formerly Twitter) that while allowing early investors to stake may make sense from a governance perspective, the rewards they earn should be locked until the vesting period ends.
A Familiar Problem in Crypto?
The controversy surrounding EigenLayer’s tokenomics isn’t unique. As mentioned earlier, Celestia faced a similar situation, with early investors staking their tokens to earn rewards, only to sell off large amounts afterwards.
It led to a significant price drop. TIA, Celestia’s token, has been down 75% since February—a cautionary tale for projects like EigenLayer.
One of the more contentious points in the EigenLayer launch was the large allocations given to whales.
For instance, Tron founder Justin Sun reportedly received an airdrop worth $8.75 million, much of which was deposited on the exchange HTX.
Although HTX denied any connection between the wallet address and Sun, the event only added to the growing mistrust among the community.
Looking Ahead
As the debate rages on, EigenLayer finds itself at a critical juncture. Many are calling for greater transparency, particularly regarding the staking rewards of early investors.
If the project fails to address these concerns, it risks alienating its broader community—a mistake that could have long-lasting repercussions.
In the fast-moving world of crypto, transparency isn’t just a nice-to-have; it’s a must. For EigenLayer, how they handle this situation may well determine their future in the space.