After releasing its native token, EIGEN this week, Ethereum restaking protocol EigenLayer is facing criticism over its tokenomics structure. Usually, the weeks and months preceding the launch of a token are met with hype and anticipation.
When the airdrop or launch finally happens, investors’ activities and expectations keep the token’s price high.
EIGEN Token Sees Dip in Key Metrics
There is a gradual drop with time, like in the case of Hamster Kombat’s HMSTR tokens, which were airdropped a few days ago. EIGEN might face a similar sentiment per current ecosystem musing. Depending on investors’ disposition in the short term, eyes are fixed on its key support level at $3.
The EIGEN token initially reached as high as $4.39 in early trading hours on October 1. However, it has seen more than a 17% slip in the past 24 hours. According to current market data, the token has lost 25% since hitting an ATH of $4.25.
EIGEN is now trading at $3.40, with a market cap of $636.8 million. The significant price drop is not unexpected, considering other key performance data. Its trading volume has also plunged by 38.69% coming in at $523.6 million.
With this figure, it is now ranked the nineteenth most traded token. The drop in trading volume usually indicates waning interest in the token amongst investors.
EigenLayer Supply Outlook
The EIGEN airdrop saw massive success, including its listing on crypto exchanges like Binance and OKX. The Eigen Foundation pointed out to developers how they can use staked assets to build Actively Validated Services (AVSs) within the ecosystem.
Its key metrics looked right at the time. However, some investors and community members became concerned about a lack of transparency regarding token supply. Based on the insights provided by Etherscan.io, the maximum supply for the token is 1.68 billion.
Its circulating supply, on the other hand, is 186 million. The asset has a ful ly diluted value of $5.8 billion with these figures. This figure excludes tokens not in circulation worth around $650 million.
Consequently, many community members are concerned about some of those locked tokens from early investors who bought during discounted funding rounds. About three groups of investors had already invested in the project before it was finally launched.
These include those who bought in EigenLayer’s $14.4 million seed round, $50 million Series A, and most recently, a $100 million raise in February. All these entities are free to stake their locked tokens to yield rewards.
The Call For Transparency
So far, the EigenLayer has seen 130 million EIGEN tokens staked. Initially, the stakes were considered a part of the claimed tokens. It turns out that 70 million of these tokens belong to this small group of early investors.
EigenLayer investor TardFiWhale.eth took to X to explain,
“Transparency will enable us to engage in more honest and open discussions about these issues.”
Considering how data availability protocol Celestia suffered a similar incident after its token launch, crypto projects may need to start paying more attention to their airdrops and tokenomics. Project innovators might need to create better guidelines and instructions for the airdrop allocations.
