Distributing Eigen tokens in layers and setting a maximum distribution limit will benefit small depositors. This article is sourced from an article (or tweet, post, etc.) titled “Welcome to Restaking Summer” by Bankless, and compiled, translated, and written by Blockbeats.
(Table of Contents:
Why is EigenLayer a disruptive innovator?
What services can be built on EigenLayer?
How big will the airdrop of EigenLayer be?
What does this mean for individual depositors?
How to maximize the opportunity of EigenLayer airdrop?
As of January 25th, according to information from the EigenLayer official website, the EigenLayer Total Value Locked (TVL) reached 800,000 ETH, equivalent to approximately $1.788 billion. Additionally, the team is introducing a new method of distributing rewards for staking, which will set the maximum staking rewards for any LST, LRT, or individual deposits at 33% of the total future supply.
Bankless analyst Jack Inabinet delves into the concept behind EigenLayer and provides a detailed explanation of its reward mechanism, analyzing its potential airdrop value. The translation of the original article by BlockBeats is as follows:
Only a few crypto projects have created at least a billion dollars in wealth for early users through airdrops, but we may soon see another popular protocol join this list.
Staking as a revolutionary economic primitive is being pushed to the forefront by EigenLayer, which is working to make it a reality.
Today, we will explore why EigenLayer is a disruptive game-changer, give examples of the service types that can be built on top of it, explain why EigenLayer is the next billion-dollar airdrop opportunity, and estimate the scale of airdrops one can expect from participating in EigenLayer.
EigenLayer has created a decentralized marketplace that allows Ethereum holders to “restake” their tokens, providing security for not only other crypto applications on the Ethereum network.
As a programmable trust network, EigenLayer enables developers to build decentralized networks without the difficulties of launching and operating their own trust networks.
By no longer having to worry about running validating node networks, protocol developers can focus more on important matters, such as building their applications, rather than expending excessive effort supporting the market value of their staked tokens that protect their decentralized networks.
This lowers the barrier to entry for creating one’s own decentralized network and empowers the long tail of crypto security applications.
Protocols using EigenLayer “lease” the economic security from existing Ethereum stakers, bringing capital efficiency to staking by reusing already staked Ethereum for multiple applications, effectively reducing the cost of securing additional networks while maintaining strong trust guarantees for individual services.
For restakers of EigenLayer, the protocol offers two opportunities for enhanced earnings. Restakers can earn enhanced yields by protecting other networks, and they are also eligible for airdrops from the protocols utilizing their services.
EigenLayer Active Validation Services (AVS) refers to any system that requires its own decentralized validation node network for validation and relies on EigenLayer for security. The term “AVS” is actually a true general term that can be applied to a wide range of decentralized validation applications that a protocol can serve.
Restakers entrust their stakes to AVS operators who operate EigenLayer’s infrastructure and use restakers’ Ethereum as collateral for their services in exchange for the ability to use the staked Ethereum as collateral for their services.
The most notable AVS is EigenLayer’s data availability solution, EigenDA.
Although EigenDA is not yet live, it is expected to significantly reduce the cost of releasing data on rollups and is expected to offer a more cost-effective solution than the leading DA solution, Celestia, thanks to the cost efficiency of restaking in comparison to the operation of independent L1 blockchains in the Celestia model.
However, EigenLayer’s ability to secure networks goes beyond the Ethereum ecosystem, with various applications being built on the Cosmos ecosystem.
For those who do not want to launch their own token and network of validation node sets in the Cosmos ecosystem, Cosmos Hub (ATOM) has long been a major provider of cross-chain security, but EigenLayer aims to quickly capture this crown.
Etheros and Lay3r are two AVSs that will enable Cosmos chains to launch their L1 using EigenLayer’s existing trust network, providing a more attractive (and cost-effective) alternative for security for Cosmos Hub.
Just as EigenLayer’s AVS can be used to secure L1 and L2 blockchains, they can also validate various other crypto systems, including decentralized guardians and oracle networks.
EigenLayer also aims to improve interoperability: their fast-finality AVS will allow for instant settlement of any transaction, and bridge protocols can leverage AVS to use EigenLayer’s restaked Ethereum network as collateral, reducing waiting times for settlement during user transactions.
While the intersection of artificial intelligence and cryptography is just beginning to be explored, EigenLayer may become a significant participant in unifying these two environments. Onchain AI interfaces may soon be able to verify the integrity of their algorithms using AVS, generating zero-knowledge proofs, and the capital efficiency of EigenLayer’s restaking model makes it more cost-effective than alternative ZKML technologies.
Valuing crypto protocols with actual cash flow is already challenging, let alone for protocols that do not yet exist. While there is no direct comparison for EigenLayer, Celestia provides a close enough competitor to base its valuation on.
The sole purpose of Celestia may be as a data availability layer, but the full-diluted valuation (FDV) of the network’s TIA token currently stands at $15 billion, slightly below the peak of $20 billion reached briefly last week.
Compared to Celestia, EigenLayer has the advantage of offering multiple additional services, beyond data availability, and has multiple revenue-driving factors, which means the market may view EigenLayer as a more attractive investment opportunity than Celestia.
Unfortunately, EigenLayer’s valuation is affected by the fact that it is not a blockchain network, meaning that the EIGEN token cannot accumulate an L1 premium as expected.
In fact, this means that the utility of EIGEN is lower than that of TIA, as it will not be an asset staked by AVS. This factor will reduce the demand for the token and may result in EigenLayer trading at a lower valuation.
EigenLayer can choose to enhance the utility of EIGEN by using it as the payment token for services provided by the network. However, this is not an efficient source of demand and will be partially offset by inevitable selling pressure from restakers and AVS operators who will compensate themselves by cashing out and converting into another asset.
Taking all these factors into consideration, it seems reasonable to assume that EigenLayer could trade at a FDV similar to Celestia, ranging from $10 billion to $20 billion, possibly around $15 billion at the time of initial launch.
While the token economics of EigenLayer are currently unknown, it is not surprising to assume that they would airdrop 10% of their token supply to early users, which would easily make the protocol a billion-dollar airdrop opportunity.
Currently, 760,000 ETH has been deposited into EigenLayer, and the upcoming increase in the LST limit will further increase the amount of ETH. Depositors earn one point per ETH staked per hour, and the total accumulated points amount to around 1 billion.
We cannot know how many EigenLayer points there will be, as it is still unclear when the airdrop will take place and how much ETH will earn points at that time, but we know that Polymarket currently assigns a 13% probability for the EigenLayer airdrop to occur before April.
Assuming a minimum of 180 days from the next time the deposit limit is raised and a linear increase in the amount of ETH staked to 1 million during this period, there will be approximately 4.8 billion points at the time of the airdrop.
In the valuation range of $10 billion to $20 billion, assuming a 10% airdrop of the total EIGEN supply, depositors can expect to earn $0.21 to $0.41 per point, representing a range of claiming opportunities for ETH deposited when EigenLayer raised its LST limit on February 5th from $907 to $1,814.
It is worth noting that while many assumptions need to be met for this estimate to hold, this is just the minimum distribution that non-whale depositors can expect. Distributing Eigen tokens in layers and setting a maximum distribution limit will benefit small depositors.
To be eligible for the EigenLayer airdrop, the first thing to do is set a reminder on the calendar to deposit ETH on February 5th.
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