Airdropped EIGEN tokens are non-transferable | Credit: Unsplash.
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Key Takeaways
EigenLayer has opened claims for the EIGEN airdrop.
However, recipients won’t be able to transfer airdropped tokens straight away.
The move to restrict transfers has fueled criticism of the project.
After months of anticipation, the Ethereum liquid staking platform EigenLayer opened claims for the EIGEN airdrop on Friday, May 10. But the distribution comes with a catch. Tokens are geo-locked and non-transferable until an unknown date in the future.
The decision to impose restrictions on EIGEN transactions has fueled criticism of the project, with some observers calling foul play. But others argue that it is a shrewd move that could protect the company from regulatory pressure.
Controversy Over EIGEN Distribution
From the outset, many users have said EigenLayer’s token distribution plan is unfair.
Out of the total supply of 1.67 billion EIGEN, only 15% are allocated to airdrops and only 5% to the first round. Meanwhile, investors and the EigenLayer team will receive 29.5% and 25.5% respectively.
1/ EIGEN stakedrop claims are open! 🪂 ♾️∑
We're thrilled to announce that claims for EIGEN are now open for Phase 1 of Season 1!
The EIGEN token accelerates @eigenlayer & Ethereum toward a shared mission of open innovation. ♾️
— Eigen Foundation (@eigenfoundation) May 10, 2024
Adding to the outrage, when the airdrop was finally initiated, users discovered that they wouldn’t be able to transfer their tokens straight away. A geo-fencing policy also blocks users in many countries, including the US, from receiving EIGEN.
Airdrop Restrictions
Some people have warned EIGEN’s airdrop restrictions should act as red flags to investors. For instance, influential crypto trader Ran Neuner called EigenLayer “a traditional VC scam […] where VC insiders fleece retail investors.”
Eigen is traditional VC scam. A scheme where VC insiders fleece retail investors again.
– Early VC’s get in early at small valuations – Retail will get in at $15bn+ – low circulation high FDV at start – let’s fleece more retail – Insiders and VC’s have inside information on… pic.twitter.com/fcZ8ux8C9E
However, others have pointed out that given regulatory uncertainty in the US and elsewhere, non-transferability and geo-fencing could protect the token issuer from legal liability further down the line.
Anticipating an SEC Investigation?
In light of the US Securities and Exchange Commission’s current approach to crypto assets, EigenLayer’s decision to restrict access to the airdrop could be viewed as a precautionary measure.
The SEC has made it clear that it views most tokens as securities. Issuing EIGEN directly to customers in the US could therefore open the company to a Ripple-style lawsuit alleging an unregistered securities offering.
In a similar vein, as long as the token remains non-transferable, it would be difficult for the SEC to argue that it falls under US securities law. By foreclosing the possibility of transacting (at least for now) the EIGEN airdrop conveniently sidesteps the entire debate over whether or not the token passes the Howey Test.
James Morales is CCN’s blockchain and crypto policy reporter. He has been working in the news media since 2020, writing about topics such as payments, banking and financial technology. These days, he likes to explore the latest blockchain innovations and the evolving landscape of global crypto regulation.
With an educational background in social anthropology and media studies, James uses his platform as a journalist to explore how new technologies work, why they matter and how they might shape our future.
