Haotian: Interpretation of the design philosophy in Eigenlayer token economics

Author: Haotian, Source: Author's Twitter @tmel0211

Sure enough, the rumor that @eigenlayer will open for trading on September 30th is true. Last night, Eigen Foundation announced the final time for removing the $EIGEN restricted trading: 9.30.2024.

What do you think? Next, combined with its Tokenomics design philosophy and the 7-day waiting period for staking withdrawals, let me talk about my opinion.

1) After the second wave of airdrops of Eigenlayer, Restaking platforms including Eigenpie, Puffer, Stakestone, Swell, etc. have successively launched airdrop activities. The Restaking track does have the lively effect of "one flower blooms, then a hundred flowers bloom". Presumably, after the trading function is opened, the performance of EIGEN's secondary market will have a great impact on the re-staking track. But why did the foundation open the tradable function in this "Schrödinger's bull-bear awkward period"? On the one hand, it may represent the Eigenlayer Foundation's optimism about the subsequent market after the interest rate cut. On the other hand, the entire Restaking ecosystem is waiting for the leadership of the "big brother". The gradual implementation of the AVS infrastructure and other re-staking platforms have also accumulated market expectations for a long time. It's time to step up. In my opinion, opening it now is the best choice regardless of macro market sentiment and ecological market fundamentals. 2) There is a 7-day waiting period for canceling the pledge, that is, if you want to transfer on the day of the tradable day, you have to act today. The Eigenlayer Foundation chose to announce the news a week ago to fully take into account the concerns of the pledgers. The official said that in view of EIGEN's innovative fork function, but many people are puzzled, what is the relationship between the pledge waiting period and the fork? This requires a discussion of its abstract token economics.

Recently, Eigenlayer researcher @0xkydo also bullished me about the intersubjective innovative token paradigm. I have previously written an article to do a system analysis: https://x.com/tmel0211/status/1785527871605502320 .  

In short, EIGEN is an "uncertain" token. Any AVS node or individual can initiate a fork of the Eigenlayer protocol, and in the end only the protocol and corresponding EIGEN token that the majority of people choose to support are legal.

This design embodies the profound Tokenomics design philosophy and is a self-regulating and adaptive system.

This means that if some AVS or group rights are too concentrated, they may be forked. If short-term speculative users are greater than long-term value investment users, they may also be forked. Of course, if the team's performance is seriously out of line with market expectations, there is also a chance of forking. Assuming that there is a lot of selling pressure after the opening of trading, the staking users have enough time (7 days) to initiate a voting fork. (This is an extreme case. In fact, considering the limited number of circulating tokens, the probability of temporary forking is low. This example is only used to assist understanding)

In short, compared with the secondary market performance expectations after EIGEN is launched, Eigenlayer's intersubjective innovative token paradigm is also a focus worthy of attention. Especially now that the POS chain is uniformly experiencing the current situation where the staking income cannot offset the losses caused by market fluctuations, many people have doubted the correctness of the narrative of the POS chain.

This kind of token economics that dominates the long-term value orientation and can dynamically maintain balance is worth learning and reference within the industry.

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