Controversial Airdrop by EigenLayer Sparks Debate in Crypto Community
Summary:
The Ethereum restaking protocol EigenLayer's ongoing airdrop has sparked controversy due to restrictive guidelines for claiming rewards. Critics, including project founders and crypto users, assert that such airdrops no longer have transformative capabilities. Concerns also arise around the initial small supply aimed to manage anticipated user dissatisfaction. Despite controversy, EigenLayer plans to distribute an additional 28 million EIGEN to 280,000 wallets following initial backlash. The article highlights recent airdrops' failure to maintain initial momentum, citing examples of Wormhole and Starknet. Concerns over popular airdrops being exploited by farmers and Sybil accounts are also discussed.
Continuing buzz surrounds an airdrop event conducted by Ethereum re-staking protocol, EigenLayer, as the restrictive guidelines for claiming rewards spark increasing debate. Both the project's founders and various users within the crypto space have weighed in on these frustrations. Leandro Schlottchauer, co-founder and CEO of Kuyen Labs, a smart contract developer, expressed that the era of transformative airdrops has most likely come to a close. He noted that no airdrop or similar scheme can fully meet the expectations of the whole community. Community members are not seeing eye-to-eye on the core team's proposals about the quantity of the airdrop for early contributors and the limited geographical locations from which users can claim.
Mohak Agarwal, CEO and founder of Claystack, a liquid-staking protocol, explained that EigenLayer's strategy to surprise users with its airdrop announcement is not a feasible long-term model. Although it may initially cause a frisson of anticipation, it often results in disenchantment later on. He pointed out that this pattern seems to indicate that projects typically start with a modest airdrop supply, anticipating user dissatisfaction and subsequently provide more tokens to appease them. This is a short-term solution that lacks sustainability.
On April 29, EigenLayer, the second largest DeFi protocol with a $15.67 billion TVL, released a surprising blog post detailing its airdrop plans. These included only allocating 5% of the initial token supply to early users who participated in Season One, and not allowing users from specific countries to claim EIGEN tokens.
This announcement was met with wide-spread disapproval from the community, with a few dubbing it as "unfair". In the wake of this backlash, EigenLayer developers disclosed on May 3 that they planned to distribute an additional 28 million EIGEN to 280,000 wallets.
However, the enthusiasm around airdrops has been dampened as recent events have failed to retain their initial momentum. On April 4, Wormhole, a cross-chain messaging platform, transferred $800 million worth of its W tokens to select users and saw its valuation soar to an eye-popping $22 billion. But since then, the token has lost over half its value and currently trades at $0.6457. Similarly, the Ethereum layer-2 scaling solution Starknet's native token, STRK, lost 43% of its value since its February airdrop. This resulted from eligible wallets being overrun with airdrop farmers creating multiple developers’ accounts on GitHub to claim STRK tokens.
There have also been concerns about farmers and Sybil accounts taking advantage of these popular airdrops. This action results in a vast portion of tokens being allocated to ineligible accounts thereby negatively impacting genuine ecosystem users. This can result in the project's reputation deteriorating, an inflated token supply and the potential for price manipulation due to excessive selling off by airdrop farmers once the event concludes, mentioned researchers at Gamic HQ.
Published At
5/6/2024 10:30:00 PM
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