EigenLayer Updates Staking Documentation Amid Community Concerns Over Transparency
EigenLayer, a leading restaking protocol, has updated its documentation to address transparency issues surrounding its staking practices and reward distribution.
This move comes in response to community criticism over early investors staking locked EIGEN tokens and receiving unlocked rewards—an aspect that was not initially disclosed publicly.
The controversy began this week when EigenLayer’s community raised concerns about the true circulating supply of its native token, EIGEN. Investors were reportedly allowed to stake locked tokens while receiving unlocked rewards, leading to confusion about the token’s actual float. This sparked concerns over potential special treatment for early investors, especially amid the recent lifting of transfer restrictions on EIGEN at midnight ET on Monday.
Lack of Transparency Sparks Confusion
Crypto community member “Karl_0x†took to X (formerly Twitter) today to reveal that 40% of all EIGEN staked tokens came from just 13 investor addresses. According to Karl_0x, the public was unaware of this practice, believing these tokens were in circulation, which resulted in misleading conclusions about the token’s availability and impacted investment decisions.
Earlier in the week, ahead of EIGEN’s trading launch, Kairos Research had estimated that following EigenLayer’s two stakedrops, the circulating supply of EIGEN would be around 200 million out of a total supply of 1.67 billion tokens—approximately 12%. However, the research firm later clarified that only 85.4% of tokens from season one were claimed (95 million EIGEN), and only 21.7% (18.6 million EIGEN) were claimed in season two. This left the actual circulating supply at 114 million tokens.
Of these, 73 million EIGEN have been restaked via EigenLayer, bringing the true float down to 40.43 million tokens. Kairos Research noted that this 2.42% float could lead to significant volatility as price discovery unfolds.
Updated Documentation and Community Response
In response to the growing concerns, EigenLayer updated its documentation, clarifying that its staking system caps total annual rewards for EIGEN stakers at 1% of the initial token supply. Of the programmatic incentives, 25% are allocated to EIGEN staking, while 75% are reserved for ETH and ETH-equivalent staking. This distribution aims to ensure non-investors also benefit from staking rewards.
EigenLayer also confirmed that investors are permitted to stake both EIGEN and other assets, with rewards being unlocked. However, team members from Eigen Labs and Eigen Foundation are restricted from staking for at least one year. Additionally, investors were excluded from initial stakedrops and will only earn rewards through future programmatic incentives.
Despite these clarifications, some community members, such as “TardFiWhale,†expressed dissatisfaction, stating that the updates came too late. “This should’ve been announced long ago,†TardFiWhale posted on X, criticizing EigenLayer for only addressing the issue after being publicly called out.
Impact on Circulating Supply and Volatility of EigenLayer Token
The discrepancies in the circulating supply have fueled discussions about the potential price volatility of EIGEN. As the community and investors react to the new information, the token’s market behavior is expected to fluctuate as price discovery takes place.
Also read: How To Start Staking Crypto on Coinbase: A Step-By-Step Guide
With EigenLayer’s documentation now updated, the restaking protocol hopes to restore trust within its community and provide greater clarity on its staking practices moving forward. However, the lingering concerns highlight the importance of transparency in token distribution, especially in the rapidly evolving crypto space.
