Tokens magically appearing in your wallet? On 10 May, 2024, the EigenLayer airdrop for the EIGEN token began, capturing significant attention in the crypto world. Users could initially accrue ‘points’ by restaking their staked ETH. Eventually, this led to the airdrop. However, there was no ‘promise’ to distribute tokens, which is a key part of point systems: Protocols do not promise anything.
Restaking in a nutshell
EigenLayer extends the capabilities of the Ethereum network through a concept called “restaking”. Restaking, or programmable staking, allows users to leverage their staked ETH and empower other proof-of-stake services on Ethereum, known as actively validated services (“AVSs”). AVSs can benefit from an already established proof-of-stake network. Stakes of several services are pooled together and repurposed to validate transactions across different services, increasing the security of each service against attacks and avoiding fragmented security across networks. In return, restakers earn rewards by using their initial capital across multiple protocols beyond native Ethereum, generating additional returns. Additionally, restakers who restaked on EigenLayer collected points and are eligible for the airdrop of the EIGEN token.
What is an airdrop?
An airdrop is a method used by blockchain protocols to distribute (‘drop’) tokens to specific wallet addresses. Various types of airdrops exist, and they may require participants to complete certain tasks or hold a certain number of existing tokens in order to earn points.
Historically, the first airdrop occurred in 2014 when Auroracoin, a project designed to be a national cryptocurrency accessible in Iceland, airdropped their AUR token to the entire population. Currently, there is a ‘points meta’ around airdrops, meaning that most airdrop apply a points system. These points systems have no known or guaranteed reward or timeframe and are subject to changes at the project’s discretion.
But why do protocols conduct airdrops?
- Boosting adoption and awareness: By giving out ‘free tokens’ to potential users, companies can attract attention and encourage the use of their platforms or services. This increased visibility can help build a community and user base quickly.
- Incentivizing participation: Airdrops reward existing users for their loyalty or certain behaviors, such as holding a related cryptocurrency, participating in a blockchain network, or engaging in specific activities like staking or governance voting. This helps in creating a more active and engaged community.
- Decentralizing token distribution: The broad distribution of tokens reduces the risk of a small number of holders concentrating ownership. This supports the decentralization principles of blockchain technology and enhances the security and credibility of the network.
- Driving speculation and trading volume: Free tokens can be traded on exchanges, increasing trading volume, the token’s liquidity and potentially its price. This benefits early adopters and increases the visibility of the project.
- Cross-promotion: Airdrops can promote collaboration between different blockchain projects. For example, one project could distribute tokens to the holders of another specific token to attract interest from an already engaged community that is likely to be receptive to similar technologies or platforms.
Overall, airdrops are a powerful marketing and community-building and distribution tool in the blockchain ecosystem, enabling projects to launch with a ready-made base of potential users and supporters.
The EigenLayer airdrop
As per their airdrop terms, the elgibility to receive an airdrop is at EigenLayer’s sole discretion. Initially, the airdropped tokens are non-transferable, meaning they cannot be sold or traded on other platforms immediately. In total, EigenLayer airdrops 15% of the initial EIGEN supply as a “stakedrop” over several phases:
- Phase 1: This phase targeted users who directly restaked ETH or specific liquid staking tokens on the EigenLayer platform before the snapshot of 15 March 2024. The claim window started on 10 May 2024 and runs for 120 days.
- Future phase(s): As EigenLayer airdropped 6.05% of the 15% of the initial token supply for phase one, there will be future phases ahead. In phase 2, users who interacted with EigenLayer through DeFi protocols before the snapshot date of 15 March 2024 are eligible for the airdrop and can claim tokens mid-June 2024.
The EigenLayer airdrop showcases the opportunity of blockchain innovation to distribute rewards to the community. Participants and interested parties should closely follow developments and check official channels for updates to maximize their chances and stay informed.
Airdrop tokens compliantly?
Are you running a protocol and considering airdropping tokens to loyal contributors and early adopters? If you’re unsure about the best practices and how to conduct a compliant airdrop, LEXR can guide you. We offer individualized airdrop terms and in-depth token assessments to ensure your strategy is effective and compliant.
Contact us today to ensure your airdrop strategy not only succeeds but also builds trust among your users, which is the cornerstone of your success.
