5 Reasons E-Beggars Are Not Happy With EigenLayer’s Airdrop

EigenLayer’s hotly anticipated airdrop, unveiled on Monday, has already come under fire.

The plan governing the release of EigenLayer’s token, EIGEN, took heat for a number of its provisions, including preventing token holders from transferring EIGEN after claiming tokens. Others took issue with the percentage allotted for the community airdrop. 

EigenLayer is the second-largest decentralized finance protocol by total value locked (TVL) and is known for restaking. Questions around the airdrop’s potential impact on Ethereum circulated on Monday.

The total supply of EIGEN is set to stand at over 1.67 billion tokens. It’s not a fixed supply, meaning additional tokens could be issued after launch.

Of that, 29.5% is reserved for investors and 25.5% dedicated to early contributors. The remainder is earmarked for three community segments.

Here are five reasons why e-beggars are mad about it all.

1. EIGEN Can’t Be Traded and Will Be Untransferable Initially

While early EigenLayer adopters can claim their tokens on May 10, they cannot transfer EIGEN until an undisclosed date.

That’s because the Eigen Foundation, set up to oversee the airdrop, said so. They, more specifically, said they have “goals” to accomplish before letting EIGEN trade freely.

The first includes conducting lengthy community discussions designed to solicit feedback on the token’s design, as well as implementation parameters. 

Eigen Foundation wants key payments and slashing features to be “well established and understood,” before EIGEN becomes transferable.

“We believe this approach will best support the long-term growth and maturity of the EigenLayer ecosystem,” the foundation wrote. 

Community members were not pleased. The lack of transferability means EIGEN cannot be traded — again, indefinitely.

2. Imperfect Snapshot Timing 

EigenLayer conducted a March 15 snapshot vote to determine what addresses will receive an allocation. One self-proclaimed cryptographic currency speculator, who goes by @GarrettZ on X, called the snapshot date “a bummer.”  

Some were upset about the vote’s timing because e-beggars wanted points earned after March 15 to be included in the airdrop tally of season 1. That said, points earned after March 15 will be considered for subsequent seasons.

3. Linear Airdrop Favors Whales

EigenLayer’s airdrop follows a linear distribution model. That typically means a user’s percentage of total points directly corresponds to their share of the initial community distribution. For example, if one user earned 10% of all points, then that user will receive 10% of all the tokens for the initial airdrop.

In its documentation, the linear allocation of EIGEN was to prevent sybil attacks, which refers to a single person using many addresses and programmatic bots to receive an outsized airdrop allocation. The Foundation learned that many restakers would not receive “a meaningful amount of EIGEN” due to the linear distribution, and as a result,  “~1% of the total Season 1 allocation has been dedicated to establish a minimum floor of 10 EIGEN for restakers”

However, some are displeased with EigenLayer’s linear distribution model, because it does not provide special treatment for early adopters. A brand-new wallet could have deposited $1 million just before the March 15 snapshot date and theoretically have accumulated more points than smaller investors, who deposited months earlier. 

“Linear allocation for small user is terrible,” wrote one user in EigenLayer’s Discord, who goes by @sentosa0053. Another X user who goes by @JeanLucBBX said that the linear model “basically makes 1,000-2,000 Eigen stakers happy at the expense of 100k who will get peanuts.”

EigenLayer isn’t a pioneer in using a linear model. Kamino and Parcl, both native on Solana, previously adopted the approach — and smaller users likewise then expressed dissatisfaction with their distributions

4. Confusion From Documents

EigenLayer’s announcement coincided with the Foundation publishing documents elucidating the specifics of the airdrop. The documents fueled confusion. 

The documents said that people who interacted with EigenLayer-related Defi positions, such as decentralized finance protocol Pendle, will not be eligible for phase one of EigenLayer’s first airdrop season. 

Consequently, crypto users, such as early adopters of Pendle, expressed outrage, thinking they were excluded from  EigenLayer’s first airdrop season. However, phases and seasons are not the same, said Brianna Montgomery, strategy lead at Eigen Labs, the development firm behind EigenLayer, over Telegram. While Pendle users are excluded from phase one, they are not excluded altogether from season 1 and will receive an airdrop allocation in phase two. 

Although both describe time periods, EigenLayer’s seasons encompass phases, making seasons broader.

“Just came online again and am trying to understand what is happening to $EIGEN points earned through DeFi protocols. The comms docs are shambolic here. The DeFi protocols themselves also seem to be clueless and blindsided. Feels like the death of the points meta, wrote Aylo, the founder of crypto research collective Alpha Please.

5. GCR’s EigenLayer Withdraw Day After Snapshot

Between Dec. 22 and Jan. 3, a wallet identified by blockchain analytics firm Arkham Intelligence as belonging to pseudonymous trader GCR deposited 3,904 wBETH into EigenLayer’s smart contract for Binance’s liquid staking token. The deposit is worth about $12.8 million at current market prices. 

On March 8, the address queued its withdrawal from EigenLayer. On March 16, one day after EigenLayer conducted its snapshot, the request went through — and the address withdrew 1,924 wBETH, data from blockchain explorer Etherscan shows. 

“Oh wow what a coincidence GCR is withdrawing from @EigenLayer the next day after the snapshot was taken,” wrote one restaker in EigenLayer’s Discord.