DeFi
How EigenLayer’s EIGEN Token Launch Redefines DeFi Amid Regulatory Challenges
Clean diaper is a protocol built on the Ethereum blockchain that introduces a new concept called “resttaking”. The rollback allows users who have already staked their Ethereum (ETH) to mine it again. By opting for EigenLayer smart contracts, users can use their staked ETH to secure other applications on the Ethereum network, potentially earning them additional rewards.
Essentially, EigenLayer acts as a middle layer that connects existing Ethereum players to new applications on the network that need security. This allows these new applications to benefit from the strong security of the Ethereum network without needing to set up their own validation system, and it allows stakers to potentially earn more rewards on their ETH. Using the vast network of transaction validators on Ethereum, EigenLayer seeks to improve on the typical 3% yield of staking, but with additional risks.
According to a Bloomberg News article published earlier today, the highly anticipated launch of EigenLayer’s new token, $EIGEN, has attracted considerable attention within the decentralized finance (DeFi) sphere. Since its soft launch in 2023, the project has apparently accumulated $14 billion in assets and is set to distribute its tokens via an airdrop this Friday. Despite all the anticipation, the launch sparked controversy due to the exclusion of users from several countries, including the United States, Canada, and China.
The project’s success is partly due to a points system that rewards early adopters with EIGEN tokens, attracting many users eager to accumulate points for airdrop. However, recent revelations that virtual private network (VPN) users and residents of certain countries are not eligible to claim tokens have sparked disillusionment within the crypto community.
Addressing the issue of exclusion, Robert Drost, executive director of the Eigen Foundation, discussed the need to comply with regulatory guidelines during a recent podcast. He acknowledged the regulatory ambiguities that force many projects to take conservative approaches to token distribution.
The unfolding drama surrounding EigenLayer’s token launch highlights the complex challenges DeFi projects face navigating a complex regulatory landscape. Nick Cote, co-founder of Secondlane, highlighted the crucial need for transparency. He noted that issuers who fail to detail jurisdictional restrictions risk alienating their user base, potentially leaving a “bitter taste” when participants discover they are not eligible for rewards.
The Bloomberg article went on to say that despite these controversies, EigenLayer quickly became the second most popular DeFi application, beating out established liquid staking protocols like Lido and Rocket Pool. These platforms have seen a 27% decline in total value locked since their peak in March. Meanwhile, nearly 4% of all Ether is now reinvested through EigenLayer, signaling a significant shift in user preferences across the DeFi landscape.
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