DeFi
Who is in and who is out? — TradingView News
The crypto world is currently abuzz with the launch of EigenLayer’s new token, EIGEN, which has quickly become one of the most anticipated digital asset events of the year.
According to Bloomberg, the project has attracted particular attention due to its approach to decentralized finance (DeFi) and its “controversial” decision to exclude users from certain jurisdictions, including the United States, China and Canada, participation in the distribution of tokens.
EigenLayer Challenges and Opportunities in Token Distribution
EigenLayer, a Seattle-based DeFi protocol, made waves in the industry by introducing a concept known as takeover. This method aims to increase rewards on the Ethereum blockchain by allowing users to deposit ETH to help run the network.
According to DeFiLlama data, since its debut in 2023, EigenLayer has attracted over $15 billion in assets, demonstrating the significant interest and potential of this new approach.
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The EIGEN token launch is expected to begin with an airdrop, a process by which tokens are distributed to users based on certain criteria, including a points system that rewards early adopters of the service.
Kunal Goel, an analyst at Messari, noted that anticipation of this airdrop was a “primary incentive” for users to place funds in EigenLayer’s service.
However, enthusiasm has been tempered by the fact that many participants who have accumulated points are now unable to claim their tokens due to the use of virtual private networks or residing in excluded countries.
Robert Drost, executive director of the Eigen Foundation, explained that the exclusions were a necessary step to meet regulatory guidelines, which are often unclear and difficult to understand, noting:
It’s not possible to operate in this space without following regulatory guidelines and being accountable, and the problem is that there isn’t a lot of clarity.
This sentiment was echoed by Nick Cote, co-founder of Secondlane, who noted:
Issuers who aren’t upfront with jurisdictional restrictions leave a sour taste in people’s mouths when it comes time to receive your rewards, and then you find out you’re disqualified for X, Y, Z reason.
Impact on the broader DeFi ecosystem
EigenLayer’s rollback service is not just a new feature in the Ethereum ecosystem; This represents a shift in how applications can leverage the vast pool of transaction validators that underpin Ethereum.
This service increases the yield of ETH staking – from a baseline of around 3% to higher rates, but with additional risks.
As a result, EigenLayer has become the “second most popular DeFi app,” as Bloomberg reports, in part to the detriment of liquid staking protocols like Lido and Rocket Pool, which have seen significant outflows in recent months.
According to DeFiLlama, liquid staking protocols have seen a decline of more than 20% in total value locked since their notable peak above $63 billion in March.
Meanwhile, according to a recent report from IntoTheblock, almost 4% of all ETH is now reinvested using EigenLayer, showing the project’s growing popularity.
EigenLayer recently surpassed $15 billion in TVL.
Nearly 4% of all ETH and 40% of the Liquid Staking Token (LST) supply is currently reinvested in EigenLayer. pic.twitter.com/LZ0vbp3L3z
Featured image from Unsplash, chart from TradingView