TLDR:
- EigenLayer is focusing on onboarding consumer Web3 applications after EIGEN token unlock
- The protocol aims to target crypto-native apps like DeFi and gaming initially
- EigenLayer’s TVL is approximately $11 billion in restaked collateral
- EigenDA serves as a “beachhead” for onboarding consumer apps into EigenLayer’s ecosystem
- An unauthorized sale of about $5.5 million worth of EIGEN tokens occurred due to a compromised email thread
EigenLayer, Ethereum’s largest restaking protocol, is setting its sights on consumer Web3 applications following the October 1 unlock of its native token, EIGEN.
The protocol, which currently secures approximately $11 billion in restaked collateral, is aiming to expand its reach beyond its current four-sided marketplace model.
Sreeram Kannan, founder of EigenLayer, revealed in a recent interview that the protocol will initially target crypto-native segments such as decentralized finance (DeFi) and gaming.
“We’re starting with the inside-out approach, focusing on high-throughput consumer apps like DeFi and gaming, but once we grow a little bigger and have critical mass, we’ll go outside and start targeting broader consumer markets,” Kannan explained.
EigenLayer’s four-sided marketplace consists of restakers, node operators, actively validated services (AVSs), and consumer apps. The protocol aims to secure dozens of third-party protocols, known as AVSs, using its restaked collateral. However, Kannan admits that the consumer side of the marketplace has not been fully tapped into yet.
The EIGEN token unlock, which was among the most anticipated events in 2024, has put pressure on EigenLayer to scale protocol revenues from AVSs. These revenues will partly accrue to EIGEN stakers. As of the latest data, EIGEN is trading at around $3.50, implying a fully diluted market capitalization of nearly $5.8 billion.
To onboard consumer apps into EigenLayer’s broader AVS ecosystem, the protocol is leveraging its own AVS, EigenDA. Specializing in data availability, EigenDA competes in one of Web3’s fastest-growing market segments. “As users adopt EigenDA, they’ll also start using other EigenLayer AVSs,” Kannan stated.
EigenLayer is also introducing a programmatic incentives program to attract restakers. The program will reward participants with EIGEN emissions comprising approximately 4% of the token’s total supply.
Kannan explained, “It’s designed to help bootstrap this multi-sided marketplace. Stakers will get programmatic rewards depending on how many AVSs they serve, and AVSs will pay fees to stakers and operators.”
Restaking, the core concept behind EigenLayer, involves using already staked tokens to secure multiple protocols simultaneously. The EIGEN token is designed to secure protocols against a broader set of faults than existing proof-of-stake tokens can address.
Unauthorized Token Sale
EigenLayer faced a setback when an unauthorized sale of about $5.5 million worth of EIGEN tokens occurred. The team reported that this was due to a compromised email thread involving one investor’s transfer of tokens. They clarified that this was an isolated incident and not due to any vulnerability in the protocol or token contracts.
The incident has raised concerns among some community members about token distribution practices. Critics questioned why tokens were sent directly to investors without a vesting contract, especially since they were supposed to be under a lockup period.
Despite this setback, EigenLayer continues to push forward with its plans to expand into consumer applications. The protocol’s success in this endeavor will likely play a crucial role in determining the long-term viability of restaking as a concept in the broader cryptocurrency ecosystem.
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