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EIGEN Token Trading and Market Volatility
EigenLayer’s native token, EIGEN, officially entered the market on October 1, 2024. Lifting transfer restrictions, it began trading at $3.90, quickly achieving a fully diluted market cap of $6.51 billion. The token found stability at $4.28, giving EigenLayer a $7.1 billion valuation. Major exchanges like Binance and MEXC promptly listed EIGEN at 5:00 AM UTC, adding to its liquidity and market accessibility. Shortly after launch, it broke into the top 100 cryptocurrencies by market capitalization, at one point ranking 94th.
Initial supply for EIGEN was set at 1.67 billion tokens, with approximately 86 million allocated through two stakedrops. Controversy brewed as Kairos Research reported discrepancies in the token distribution. According to them, only 85.4% of the 95 million EIGEN from the first stakedrop and 21.7% of the 18.6 million EIGEN from the second were claimed. This left a circulating supply estimated at 114 million tokens. The token's actual float, around 40.43 million, accounts for just 2.42% of the total supply, potentially fueling significant price volatility during its early market phase.
However, EigenLayer disputed these figures, leading to further uncertainty. Adding to the market's unease, EIGEN's price reached a high of $4.39 before plummeting over 28% to approximately $3.42. This volatility mirrored pre-launch derivatives pricing that ranged between $2 and $3.50 in OTC trades.
Staking Model and Supply Dynamics
EigenLayer's staking model allows users to stake ETH to secure third-party networks while using EIGEN as a "Universal Intersubjective Work Token." Despite this innovative approach, concerns about token distribution and staking rewards emerged. The protocol’s total value locked (TVL) declined from a peak of $20 billion to around $10.5 billion, indicating a withdrawal of stakers who received airdropped tokens.
The community expressed skepticism regarding the actual circulating supply. It was revealed that early investors could stake their locked tokens, earning rewards they could then sell on the open market. This raised eyebrows, especially after it was disclosed that 70 million of the staked tokens belong to early investors rather than being part of the circulating supply. A community member, 'Karl_0x,' highlighted that 40% of all staked tokens originated from just 13 investor addresses, questioning the token's perceived float.
In response, EigenLayer updated its documentation to clarify investor staking conditions. Although investors' staking rewards are capped at 1% of the initial token supply, these rewards unlock gradually over three years. Additionally, company employees are restricted from staking EIGEN tokens until September 2025. Of the annual staking rewards, 75% are reserved for ETH and ETH-equivalent stakers, while the remaining 25% goes to EIGEN stakers.
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Whale Activity and Market Reactions
The token's launch saw considerable whale involvement. Justin Sun, the founder of Tron, received an airdrop of 5.374 million EIGEN tokens. He quickly offloaded them for approximately $21.66 million, averaging $4.03 per token. This transaction stirred market participants as Sun transferred the tokens to HTX (formerly Huobi) and Binance shortly after they became tradable.
SpotOnChain reported additional large trades, including a transfer of 496,013 EIGEN (valued at $2.05 million) by HashKey Capital to Binance. Another wallet, “0x2fe,” potentially linked to the trader @GiganticRebirth, deposited 253,947 EIGEN, worth $1.06 million. Onchain analysis by Lookonchain further revealed that two whales had purchased a total of 702,324 EIGEN, amounting to $2.86 million.
Cryptoeconomic DVN Framework and Future Outlook
Amid the market turbulence, EigenLayer launched the Cryptoeconomic DVN Framework in partnership with LayerZero. This framework allows users to stake assets like ZRO, EIGEN, and ETH to secure cross-chain messaging, aiming to add an extra layer of blockchain communication security. Verification and veto mechanisms were integrated to ensure fairness and promote honesty through financial collateral.
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The EIGEN token’s market journey has evoked mixed reactions, with some drawing parallels to Celestia's token launch, which saw a 75% decline following early investor sales. As EigenLayer navigates through its discovery phase, the token's volatility, staking dynamics, and whale activities remain central to its market narrative.
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