Eigenlayer’s airdrop strategy under scrutiny amid community backlash
The EIGEN Foundation promised additional EIGEN tokens to 280,000 wallet holders.
The Eigen airdrop controversy has sent ripples across the crypto community, sparking debates and discussions that question the very ethos of decentralized finance.
The online dissension commenced with the announcement of Ethereum staking protocol, Eigenlayer’s, EIGEN token airdrop on April 30. EigenLayer had initially announced allocating 15% of its supply to the community, but faced criticism for its airdrop program’s restrictions.
Consequently, it has been met with significant backlash from the community.
This controversy stems from several factors:
- Complex Distribution Plan: The airdrop’s distribution plan was considered complex and led to confusion among users.
- Exclusion of Certain User Groups: Users from specific countries, including the U.S., Canada, China, and Russia, were excluded from the airdrop. Additionally, users who accessed the system via VPNs were also cut out.
- Non-Transferability of Tokens: Initially, the EIGEN tokens were non-transferable, rendering them essentially valueless until a future date when they could be traded.
- Withdrawals: In response to the airdrop terms, users queued to withdraw about 25,000 ether (ETH), worth approximately $72.7 million, from the platform.
- Uneven Allocation: There was a perception of unfairness in the allocation of tokens, with 55% going to Eigen Labs investors and early contributors, while only 5% were allocated for community stakers.
What this means for DeFi
This event has highlighted the importance of prioritizing decentralization and democratic governance in crypto.
Token allocation favoring investors and early contributors, along with the regional exclusions, goes against the ethos of DeFi.
Moreover, restricting immediate token transfers limits community involvement, alienating early supporters. To uphold the principles of DeFi, projects must adopt truly decentralized and democratic approaches.
DeFi was the most popular narrative in mid-April, followed by RWA and Layer 2.
Response from Eigen Foundation
In a blog post published May 2, the Eigen Foundation came forward to express gratitude to its community for ongoing support while addressing community questions in regards to lock-up countdown, timeline, and testnet users.
To ensure equal access, they allocate an additional 100 EIGEN to users interacting with EigenLayer before April 29th, accelerating distribution to Season 1.
After filtering out fake accounts, every user from Season 1 will receive at least 110 EIGEN tokens. Season 2 users who began staking between March 15th and April 29th will also be guaranteed a minimum of 100 EIGEN tokens.
The foundation has also taken steps to prevent Sybil attacks by not extending the additional allocation to users who stake after the announcement date.
They clarified that the lock-up countdown for investors and the team will start only after EIGEN becomes transferable to the community, with a gradual unlock of 4% per month over three years.
Furthermore, they have targeted mainnet features by September 30th, 2024, and have promised to update the testnet user allocation in Phase 2 of Season 1 to address missed claims eligibility.
This is a response aimed to enhance involvement within the community as well as transparency in EigenLayer’s development.
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