Analysis: The performance of EIGEN after its listing has been sluggish, with unclear token utility and airdrop selling pressure being the main reasons

ChainCatcher news, Four Pillars analysts pointed out that the EIGEN token of the restaking protocol EigenLayer has been hovering between $3 and $4 since its listing on October 1, a significant drop from the $13 price in the over-the-counter market earlier this year. Analysis shows that the unclear utility of the token and the selling pressure from airdrops are the main reasons for EIGEN's poor performance.

In the white paper released in April 2024, EigenLayer describes EIGEN as a "Universal Intersubjective Work Token," a complex concept that is difficult for ordinary investors to understand. The functions of EIGEN are mainly reflected in three aspects: cross-chain universality, network task execution capability, and the ability to address subjectivity failures. These complex functions are hard to communicate clearly to ordinary investors, affecting the market's perception of EIGEN's value.

The selling pressure from airdrops is also an important factor in the decline of EIGEN's price. Of the 185 million EIGEN tokens in circulation, approximately 46% (86 million EIGEN) were distributed through airdrops. This includes tokens allocated to institutional investors and cryptocurrency whales such as Blockchain Capital and Galaxy Digital. Additionally, Justin Sun and GCR reportedly transferred airdropped EIGEN worth approximately $8.75 million and $1.06 million, respectively, to centralized exchanges, exacerbating the selling pressure. The EigenLayer Foundation recently announced that approximately 1.67 million EIGEN were stolen in a hacker attack, further undermining market confidence.