Layered distribution and setting a maximum distribution limit for EIGEN tokens will benefit small depositors. This article is sourced from the article “Welcome to Restaking Summer” by Bankless, compiled, translated, and written by Blockbeats.
Table of Contents:
Why is EigenLayer a disruptive innovator?
What services can be built on EigenLayer?
How large will the airdrop of EigenLayer be?
What does this mean for individual depositors?
How to maximize the opportunity of EigenLayer airdrops?
As of January 25th, according to information from the EigenLayer official website, EigenLayer TVL has reached 800,000 ETH, worth approximately $1.788 billion. In addition, the team is introducing a new method of distributing re-staking points, which will set the maximum limit for distributing re-staking points to LST, LRT, or individual deposits at 33% of the future issuance.
Bankless analyst Jack Inabinet delves into the ideas behind EigenLayer and provides a detailed explanation of its point mechanism, analyzing its potential airdrop value. The following is the translation by BlockBeats:
Only a few crypto projects have created at least billions of dollars in wealth for early users through airdrops, but we are likely to see another popular protocol join this list soon.
Restaking has become a transformative economic primitive in the crypto world, and EigenLayer is at the forefront of making it a reality.
Today, we will explore why EigenLayer is a disruptive game-changer, provide examples of 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 after participating in EigenLayer.
EigenLayer has established a decentralized market that allows Ethereum holders to “re-stake” their tokens to provide security for not only other crypto applications on the Ethereum network.
As a programmable trust network, EigenLayer allows developers to build decentralized networks without the difficulties of launching and operating their own trust network.
By eliminating the need for protocol developers to worry about running and validating node networks, they can focus more on important matters such as building their applications instead of exerting too much effort supporting the market value of their decentralized network’s staking tokens.
This lowers the barrier to entry for building one’s own decentralized network and empowers the long tail of secure crypto applications.
Using EigenLayer, protocols are “renting” the economic security of Ethereum from existing Ethereum stakers, which brings capital efficiency to staking, effectively reducing the cost of securing additional networks while maintaining strong trust guarantees for individual services.
For re-stakers of EigenLayer, the protocol offers two opportunities for enhanced returns. Re-stakers can earn enhanced returns by securing other networks and are also eligible for airdrops from protocols using their services.
EigenLayer’s Active Verification Service (AVS) refers to any system that requires its own decentralized verification node network for verification and relies on EigenLayer for security. The term “AVS” is actually a general term that can be applied to any decentralized verification application that the protocol can serve.
Re-stakers entrust their staking to AVS operators, who operate the infrastructure of EigenLayer and use the staked Ethereum of re-stakers as collateral for their services.
The most well-known AVS is EigenDA, EigenLayer’s data availability solution.
Although EigenDA is not yet live, it is expected to significantly reduce the cost of releasing data on rollups and is expected to provide a more cost-effective solution than the leading DA solution Celestia, thanks to the cost efficiency of re-staking compared to the cost of operating independent L1 blockchains in the Celestia model.
However, EigenLayer’s ability to secure networks goes beyond the Ethereum ecosystem, and various applications are being built on the Cosmos ecosystem.
For those who do not want to launch their own token and network of validator nodes in the Cosmos ecosystem, the Cosmos Hub (ATOM) has long been the main cross-chain security provider. However, EigenLayer hopes to soon take this crown.
Ethos and Lay3r are two AVSs for Cosmos chains that will allow Cosmos chains to utilize EigenLayer’s existing trust network to launch their L1, providing a more attractive (and cost-effective) security alternative for the Cosmos Hub.
Just as EigenLayer’s AVS can provide security for L1 and L2 blockchains, they can also verify various other crypto systems, including decentralized guardians and oracle networks.
EigenLayer also aims to improve interoperability: their fast finality AVS allows for instant settlement of any transaction, and bridge protocols can use AVS to utilize EigenLayer’s re-staked Ethereum network as collateral, reducing settlement waiting time during user transactions.
Although the intersection of artificial intelligence and cryptography is just beginning to be explored, EigenLayer could become a significant participant in unifying these two environments. On-chain 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 re-staking model makes it more cost-effective than alternative ZKML technologies.
Valuing crypto protocols with actual cash flows is already challenging enough, let alone for protocols that don’t exist yet. While there is no direct comparison to EigenLayer, Celestia provides a close enough competitor to base valuation on.
The sole purpose of Celestia may be as a data availability layer, but the currently diluted valuation of its TIA token stands at $15 billion, slightly lower than the peak of $20 billion reached last week.
Compared to Celestia, EigenLayer has the advantage of providing multiple additional services besides data availability, with multiple revenue drivers. This means the market may see 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 the EIGEN token cannot accumulate L1 premiums as expected.
In fact, this means the utility of EIGEN is lower than that of TIA, as it will not become an asset for staking AVS. This factor will reduce the demand for the token and may result in EigenLayer trading at a lower valuation.
EigenLayer may choose to enhance the utility of EIGEN by using it as a 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 re-stakers and AVS operators, who will use it as compensation and hope to convert it into another asset.
Considering all these factors, it seems reasonable to assume that EigenLayer will trade with a similar FDV as Celestia, ranging from $10 billion to $20 billion, possibly around the initial launch.
Although the token economics of EigenLayer are currently unknown, it is not surprising to assume that they will airdrop at least 10% of their token supply to early users, making the protocol easily a billion-dollar airdrop opportunity.
Currently, 760,000 ETH has been deposited in EigenLayer, and the upcoming increase in the LST limit will further increase the amount of Ethereum. Depositors earn one point per Ethereum staked per hour, and the total accumulated points are around 1 billion.
We cannot know how many EigenLayer points there will be, as it is unclear when the airdrop will take place and how much Ethereum will earn points at that time, but we know that Polymarket currently assigns a 13% probability of EigenLayer airdrop arriving before April.
Assuming that the airdrop of EIGEN requires at least another 180 days from the time of the next increase in the deposit limit and during this period, Ethereum deposited linearly increases to 1 million, there will be approximately 4.8 billion points during the airdrop.
In the valuation range of $10 billion to $20 billion, assuming 10% of the total EIGEN supply is airdropped, depositors can expect to receive $0.21 to $0.41 per point, representing a range of claiming opportunities for Ethereum deposited on February 5th from $907 to $1,814.
It is worth noting that while many assumptions must be met for this estimate to hold true, this is only the minimum allocation that non-whale depositors can expect; layering the distribution and setting a maximum distribution limit for EIGEN tokens will benefit small depositors.
To qualify for the EigenLayer airdrop, the first thing to do is set a reminder on the calendar to deposit Ethereum on February 5th.