Yesterday, crypto media CoinDesk published an article titled "Top crypto startups offer their employees airdrops from other projects" revealing that EigenLayer has forced ecological project airdrops. According to an investigation by CoinDesk, employees of Eigen Labs, the company behind EigenLayer, have accepted millions of dollars in payments from some other projects that rely on its technology, raising the issue of potential conflicts of interest.
Wu said that Blockchain analyst @defioasis found 51 suspected Eigen Labs employee addresses through on-chain investigation, which received a total of 487,933 ETHFI, 1,964,838 ALT and 1,335,090 REZ, with a peak value of more than 5.5 million US dollars. Among them, 41.3% of the addresses chose to sell ETHFI; 41.5% sold ALT, 31.7% continued to pledge ALT; 40% sold REZ.
EigenLayer bribery?
One team told CoinDesk that they sent each Eigen Labs employee a portion of the newly minted cryptocurrency as a “thank you.” Each employee ultimately received tokens worth $80,000. Another team said they received a list of wallet addresses from Eigen Labs and felt pressured to pay the tokens or risk jeopardizing their relationship with a company that could make or break their business.
At the beginning of 2024, more than a dozen blockchain applications rushed to launch on EigenLayer, including cloud computing services and data storage platforms. Also joining this wave are "liquid re-staking" services, which make deposits on EigenLayer more user-friendly. These new applications consume millions of dollars in venture capital and create billions of dollars worth of cryptocurrencies when the market is good.
They distribute new tokens through airdrops. In this process, Eigen Labs helps its employees to obtain these airdrops. They distribute a list of employee wallet addresses. But the company insists that they will only provide this list if these projects actively request it.
“For projects interested in airdropping to Eigen Labs, we provide a list of all Eigen Labs employee addresses,” the company said in a statement to CoinDesk. Eigen Labs Chief Business Officer Alan Curtis reiterated that the company only sends this list to teams that have contacted and are interested in airdropping to Eigen Labs or its employees.
But one team told CoinDesk that Eigen Labs sent them the list even though they had not requested it. The project’s developer said Eigen Labs asked the project to provide airdrops to its employees. The request was difficult to ignore due to Eigen Labs’ influence, and the developer, who spoke anonymously, said he feared retaliation for it.
According to CoinDesk's analysis, AltLayer distributed 46,512 ALT to each Eigen Labs employee. Ether.Fi followed closely behind, distributing 10,490.9 ETHFI per person. Then came Renzo, who received 66,667 REZ per person. At the peak of the price, the three airdrops were worth approximately $30,000, $80,000, and $16,666, respectively.
On-chain records show that from the end of January to mid-June 2024, Eigen Labs employees received a total of 487,928 ETHFI (valued at $3.5 million at its peak), 1,733,342 REZ (valued at $433,300 at its peak), and 1,539,563 ALT (valued at $1.02 million at its peak).
Several industry sources who spoke to CoinDesk said airdrops to Eigen Labs employees are a norm in the crypto industry: a common, though rarely discussed, perk of working for a blockchain startup with close industry ties.
“It’s a really weird crypto phenomenon where people are giving away free money all the time,” said Mike Silagadze, CEO of Ether.Fi.
Compared to government-regulated public companies, private crypto startups have wide latitude in deciding how to disclose key information, such as percentages of token holdings.
AltLayer was the only project to proactively disclose its allocations to the Eigen Labs team in a January blog post. AltLayer’s communications head Aparna Narayanan told CoinDesk that the allocations were “tokens of appreciation.”
In contrast, Renzo and Ether.fi mentioned on their token economics pages that some airdrops were reserved for ecosystem “partners,” but neither mentioned Eigen Labs employees. Kratik Lodha, an authorized representative of RestakeX Foundation, which executed the Renzo airdrop, said that “a portion was allocated to ecosystem partners, but this was not requested by anyone at EigenLayer.”
EigenLayer Response: Employees will no longer receive future airdrops
Today, EigenLayer responded to the CoinDesk article, saying that there is no evidence that Eigen Labs employees pressured any team to improperly benefit the Eigen Labs corporate entity or its employees. They pointed out that as early as May, Eigen Labs alleviated the incentive misalignment of Eigen Labs employees by changing its policies, and even its appearance.
According to the new policy, Eigen Labs employees will no longer receive future airdrops. Eigen Labs has not received any special treatment before, and has not put pressure on or given preferential treatment to any team.
Crypto companies have multiple tools (such as joint marketing, investment, fund exchange, airdrops, etc.) for business development and partnerships, and companies in the EigenLayer ecosystem are no exception. In order to allow ecosystem participants to reward each other, team-sourced contributor lists are considered the preferred distribution mechanism rather than Github contributor lists that are vulnerable to Sybill attacks.
Therefore, Eigen Labs simply helped provide contributor lists to multiple projects in the EigenLayer ecosystem, and these projects used these lists for airdrops.
In response, EigenLayer also stated that it had updated its policy as early as May. In the future, if any project wants to airdrop to Eigen Labs, it can only airdrop to the company entity.
In June, EigenLayer created the EigenLayer Ecosystem Network, which was inspired by Protocol Guild and allows projects to list their company addresses so that any project that wants to airdrop can do so. This mechanism uses crypto-native tools to achieve incentive consistency across projects and avoid the problem of incentive misalignment.
In response, one person commented that “Eigenlayer institutionalized kickbacks as company policy and did so on a public ledger.”
What the community thinks
However, in response to this incident, the first comment on the Coindesk article wrote: "It may be popular, but this is basically the purpose of tokens, that is, crypto-economic incentive adjustment, and the function of airdrops is to make different participants comply with the agreement. The problem is that it is not done transparently. If this is done through the DAO, there is no problem at all."
At the same time, some people said, “What happened to Eigenlayer is not even abnormal. The ethics of the cryptocurrency industry are so bankrupt that conflicts of interest, insider trading, and bribery have become the norm. A small circle benefits from the systematic exploitation of retail investors, and if you express your opinion on this, you will lose the opportunity to enter this circle.”
Remember in May, several researchers from the Ethereum Foundation disclosed to the public that they had accepted "consultant" positions at the Eigen Foundation, the entity behind the re-staking protocol EigenLayer, and would receive valuable EIGEN tokens, which caused great controversy in the community and sparked heated discussions, saying that this would affect the neutrality of the Ethereum Foundation.
“The Ethereum Foundation is essentially a non-profit organization. In the Crypto industry, such foundations are more opaque than traditional companies or foundations and lack basic information disclosure.”
Related reading: "Ethereum researcher gets paid millions of dollars for "working" for EigenLayer, Ethereum Foundation faces trust crisis"
Today, LRT ecological projects are pointed out to be "tributing" to EigenLayer, just as EigenLayer once "bribed" the Ethereum Foundation.
Finally, here’s a meme of the idea vs. implementation of EigenLayer.
This article was edited by ChatGPT
