$EIGEN token in simple words

On April 29, EigenLayer introduced the $EIGEN, which has a unique token design and utility. We dived deeper to explain intersubjective faults, how tokens may be forkable, and the nature of $bEIGEN.

Before discussing $EIGEN and its design, it's essential to understand some concepts introduced by EigenLayer.

The main idea behind any decentralized network or service is trustlessness. This means you don't need a central supervisor. Instead, the network's nodes work together to verify each other's work. If a node breaks the network rules, it gets punished through a process called slashing. For example, if an Ethereum validator creates two different blocks simultaneously, it's considered an attempt to split the network into two forks, and the validator is punished by slashing.

Decentralized services rely on the ability to verify if nodes violate network rules and punish bad behavior. However, not all types of bad behavior are easy to verify and punish. EigenLayer divides bad behavior (faults) into two types:

1. Objective Faults: These are behaviors that can be verified within a blockchain using mathematical or cryptographic methods.
2. Intersubjective Faults: These are behaviors that cannot be objectively identified on-chain, but any reasonable observer would agree that a fault occurred and deserves a penalty.

ETH restaking provides a way to penalize objective faults, extending Ethereum's security to other protocols. The new $EIGEN token introduces a mechanism specifically designed to address intersubjective faults.

$EIGEN works like staking, where slashing is imposed through mechanisms similar to formalized social disputes because these slashing conditions cannot be tracked on-chain. Another analogy is governance: voting for or against proposals to charge malicious actors. You can read more about objective and intersubjective faults in the white paper.

The purposes of $EIGEN are:

1. To cover off-chain slashing conditions. Examples include transaction ordering, databases, prediction markets, storage services, oracles, artificial intelligence, and more.
2. To enable protocols to implement some form of slashing without designing on-chain slashing. This can be used in new launches before ETH restaking is enabled.

$EIGEN is represented in two forms: bEIGEN and EIGEN, both of which are ERC-20 tokens that can be interchanged.

• bEIGEN: This is a bonded (staked) token used for staking. It can be withdrawn by converting it back into EIGEN. bEIGEN is subject to forking, which is a slashing mechanism.
• EIGEN: This is a transferable token used for non-staking purposes, such as DeFi. It can be bonded by converting it into bEIGEN.

The purpose of having two representations is to simplify the process and avoid complications related to forking. If there were only one token, every forking event would require DeFi platforms and CEXes to register a new fork and supply liquidity, which is inconvenient.

Now, let’s imagine that some AVS adopted $EIGEN to secure intersubjective slashing conditions. This AVS defines the mechanism for how the intersubjective slashing will work, i.e., conditions, dispute periods, voting design, etc. Here’s a step-by-step explanation of the forking process when an operator commits an intersubjective fault:

1. Social Deliberation:
   • A fault alert is raised by a bEIGEN staker.
   • Consensus participants engage in deliberation to discuss the issue.
   • Honest participants converge on an opinion and agree on who will raise the challenge.
2. Challenge:
   • Raising a challenge involves launching a new version of bEIGEN (an ERC-20 contract fork), a new challenge contract, and a new fork-distributor contract.
   • These contracts specify how malicious operators are penalized and how challengers are rewarded.
   • A challenger must submit a significant number of bEIGEN tokens as a bond, which will be returned if the challenge is successful.
   • The new bEIGEN accounts for the operators' malicious actions, slashes them, and rewards the challengers.
3. Configuring the EIGEN Contract:
   • If the challenge is successful, EIGEN should be tied to the new fork of bEIGEN through an upgrade transaction.

You can read all details about token allocation and check your eligibility on the official site https://eigenfoundation.org/ Here is a summary

The total supply of EIGEN at launch is 1,673,646,668.28466 tokens.

Notable that In the initial phase, the $EIGEN will be non-transferable and non-forkable. That means you can’t trade it and get slashing. According to the EigenLayer plans, we can expect enabling transferability by the end of Q3 after the following milestones:

• Community Discussions and agreement about EIGEN’s novel design, parameters, and proposed implementation.
• Payments and Slashing enable the improvement of key features for a sustainable marketplace.
• Enhanced Decentralization with token allocation to the community of 15% of the EIGEN supply and community participation in upcoming protocol governance.

EigenLayer announced the plans to empower decentralization and distribute 8.95% more of the initial token supply for ecosystem participation before the token become transferable and forkable (so approx. next four months).

One of the few options to participate in the ecosystem right now is by staking $EIGEN. Since the token is currently non-transferable, staking is the only available action. By staking $EIGEN, you will help secure EigenDA and other upcoming intersubjective AVSs.

To get started with staking $EIGEN, check out our step-by-step staking guide in our detailed article.

$EIGEN Staking Guide

EIGEN stakedrop claims are open. Season 1 starts with 6.05% of the initial supply ready to claim. Eigen Foundation has already announced the next stakedrop season plans and is considering distributing 8.95% of the initial token supply for ecosystem participation. This guide will explain how to participate in

P2P.org Blog: Insights, Guides, and NewsVladislav Kurenkov

1. Blog announcement
2. $EIGEN whitepaper
3. Stakedrop season1 FAQ