Analysis

Welcome to Restaking Summer

How big will the EigenLayer airdrop be?
Jack Inabinet Jack Inabinet Jan 25, 20246 min read
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Welcome to Restaking Summer

Only a couple crypto projects have ever generated at least a billion dollars in wealth for their early users at the outset of their airdrop, but we're likely poised to see another hot protocol join this list soon...

Restaking promises to be a transformative crypto economic primitive, and EigenLayer is at the forefront of the effort to make it a reality!

Today, we’ll be discussing why EigenLayer is a game changer, giving examples of the types of services that can be built on top of it, presenting you with our rationale for why EigenLayer is the next billion-dollar airdrop opportunity, and estimating how large of an airdrop you can expect to receive by participating in the EigenLayer opportunity.

All your EigenLayer airdrop questions answered 👇👇👇


Why is EigenLayer a Game Changer?

EigenLayer creates a decentralized marketplace that allows ETH holders to “restake” their tokens to provide security for additional crypto applications beyond just the Ethereum network.

As a network for programmable trust, EigenLayer allows developers to create decentralized networks while allowing them to circumvent the difficulties associated with bootstrapping and operating their own trust network.

Because protocol developers no longer need to worry about running validator networks, they can place more focus on important things – like building their applications – and less on extraneous efforts to support the market cap of the stakeable token securing their decentralized network.

This lowers the barriers to entry for creating your own decentralized network and empowers the long tail of crypto-secured applications!

Protocols using EigenLayer are “renting” their economic security from Ethereum’s existing stakers, and this reuse of staked ETH to provide security across multiple applications brings capital efficiency to staking, effectively lowering the cost to secure additional networks while maintaining strong trust guarantees for individual services.

For EigenLayer restakers, the protocol presents an opportunity to enhance yields in two ways! Not only can restakers earn enhanced yields by securing additional networks, but they’ll also be eligible to receive airdrops from the protocols tapping their services 🪂


What Services Can Be Built on EigenLayer?

An EigenLayer Actively Validated Service (AVS) is any system that requires its own distributed validator network for verification and relies on EigenLayer for security. The term “AVS” is truly a catch-all that can be applied to any of the broad range of decentralized validation applications that the protocol can service.

Restakers delegate their stake to AVS operators, who operate EigenLayer’s infrastructure and use restakers’ ETH as a bond for their services, providing back yield in exchange for the ability to use this staked Ether as collateral.

The most well-renowned AVS is EigenLayer’s data availability solution, EigenDA.

While not currently live, EigenDA is anticipated to greatly reduce costs of posting data for rollups and is expected to offer an even more cost-effective solution than leading DA solution Celestia, thanks to the capital efficiency offered by restaking versus the costs associated with Celestia’s model of operating an independent L1 blockchain.

EigenLayer’s ability to secure networks, however, extends well beyond the Ethereum ecosystem, with exciting applications emerging from the Cosmos 💫

The Cosmos Hub (ATOM) has long been the dominant interchain security provider for networks that don’t want to spin up their own token and validator set in the Cosmos ecosystem, but EigenLayer soon hopes to steal this crown.

Ethos and Lay3r are two AVSs that would enable Cosmos chains to bootstrap their L1 using EigenLayer’s existing trust network, providing a more attractive (and cost-effective) security alternative to the Cosmos Hub.

Just as EigenLayer’s AVSs can be used to provide security for L1 and L2 blockchains, they can verify all manner of other cryptographic systems, including decentralized keeper and oracle networks.

EigenLayer also aims to improve interoperability: their fast finality AVSs will allow any transaction to receive the benefits of immediate settlement, and bridging protocols can take advantage of an AVS to tap EigenLayer’s network of restaked ETH as collateral to facilitate settlement while a users transaction is in flight to reduce wait times!

While the intersection of artificial intelligence and cryptography is just beginning to be explored, EigenLayer could be a major player in unifying these two environments. Onchain AI interfaces could soon leverage an AVS to verify the integrity of their algorithm by generating zero-knowledge proofs, with the capital efficiency of EigenLayer’s restaking model making it more cost-effective than alternative ZKML techniques.


How Big Will the EigenLayer Airdrop Be?

Deriving an accurate valuation for a crypto protocol with actual cash flows is difficult enough, let alone for one that doesn’t yet exist! While no direct comparables to EigenLayer exist, Celestia provides a close enough competitor to base our valuation on.

Celestia’s only use case may be as a data availability layer, but the network’s TIA token currently sits at a fully diluted valuation (FDV) of $15B, down slightly from the $20B peak it briefly achieved last week.

Going in EigenLayer’s favor compared to Celestia is the multitude of additional services it offers; the presence of multiple revenue drivers, beyond just DA, means that EigenLayer could be viewed by the market as a more attractive investment opportunity than Celestia.

Unfortunately, EigenLayer’s valuation is dinged by the fact that it is not a blockchain network, meaning that the EIGEN token cannot be expected to accrue an L1 premium.

Practically, this means that EIGEN has less utility than TIA, as it will not be the asset collateralizing the AVSs, a factor that will reduce demand for the token compared to TIA and could cause EigenLayer to trade at a lower valuation.

EigenLayer may choose to enhance the utility of the EIGEN by using it as a payment token for the services the network provides; however, this is a less potent source of demand and would be partially offset by inevitable sell pressure from restakers and AVS operators who receive it as compensation looking to cash out and swap into another asset.

Taking all of these factors into account, it seems reasonable to assume that EigenLayer will trade at an FDV similar to Celestia, with potential valuations anywhere in the $10B to $20B neighborhood at launch.

While EigenLayer’s tokenomics are currently unknown, it does not seem out of the question to further assume that they will airdrop 10% of their token supply to early users, which would comfortably position the protocol as a billion-dollar airdrop!


What Does This Mean for an Individual Depositor?

Currently, there are 760k ETH deposited in EigenLayer, and the upcoming LST cap raise will only increase the number of Ether deposited. Depositors receive one point per ETH staked per hour and have accumulated around 1B in total points.

It’s impossible to know how many EigenLayer points will exist, as it is both unclear when the airdrop will be and how much ETH will be earning points until that time, but we do know that Polymarket is currently pricing in only a 13% chance that the EigenLayer airdrop arrives by April.

Assuming that the EIGEN airdrop does not occur for at least another 180 days from the next time they raise their deposit caps and that the amount of ETH under management linearly increases to 1M over this period, there will be approximately 4.8B points in existence at the time of airdrop.

With an estimated valuation range from $10B to $20B and assuming 10% of the total EIGEN supply is airdropped, depositors can expect to earn $0.21 to $0.41 per point, representing a claim opportunity ranging in size from $907 to $1,814 per ETH deposited the next time EigenLayer raises their LST caps on February 5th đź‘€

It is important to note that while many assumptions must be met for this estimation to hold true, this is only the minimum allocation that non-whale depositors can expect to earn; implementation of distribution tiers for the EIGEN token with a cap on the maximum allocation would favor small depositors!


How Can I Maximize the EigenLayer Airdrop Opportunity?

To qualify for the EigenLayer airdrop, the first thing you need to do is mark your calendar with a reminder to deposit ETH on February 5th!

Next, you should check out the EigenLayer quests in the Bankless Airdrop Hunter. There, you’ll be able to view all of the actions you need to take to maximize your eligibility for the drop and can also view quests for related liquid restaking protocols, including ether.fi and KelpDAO!

Don’t forget to read “Crypto Staking Sizzles” to learn about how you can use leverage to hunt 3 airdrop opportunities at once!

Action Steps:

Jack Inabinet

Written by Jack Inabinet

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Jack Inabinet is a Senior Analyst with a passion for exploring the bleeding edge of crypto and finance. Prior to joining Bankless, Jack worked as an analyst at HAL Real Estate where he conducted market research and financial analysis for commercial apartment development and acquisition activities in the Seattle region. He graduated from the University of Washington’s Michael G. Foster School of Business and remains based out of the Seattle area.

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