How will the token EIGEN issued by EigenLayer be used to enhance the security of AVS?

The EigenLayer team announced the issuance of the EIGEN token and a series of three consecutive airdrop events, as well as the establishment of the Eigen Foundation. According to the whitepaper, the primary use of the EIGEN token is for staking to secure the AVS project, complementing ETH staking to further enhance the security of the EigenLayer ecosystem.

Background: Introduction to EigenLayer

Currently, the EigenLayer protocol has a Total Value Locked (TVL) of over $15 billion and is preparing to launch actively validated services (AVS) which include a total of 9 services. According to the team's announcement, over 50 decentralized projects are also preparing to launch based on EigenLayer.

EIGEN Token Economics

EIGEN Token Basic Information

• Name: EIGEN
• Mainnet: Ethereum ERC-20
• Address: Not yet online
• Total Supply: 1.8 billion tokens

EIGEN Token Distribution

Developers and investors will receive 55% of the token allocation, which will be locked for one year and linearly unlocked in the second and third years. The community will receive 45% of the token allocation, and all tokens are currently non-transferable.

• Airdrop: 15%
• Marketing Plan: 15%
• Ecosystem Development: 15%
• Investors and Developers: 55%

The airdrop will be distributed over three quarters, with 5% of the total tokens being distributed each quarter. The first round of airdrop activity, Stakedrop Season 1, will be divided into two stages, distributing approximately 85.68 million and 7.77 million EIGEN tokens individually. Airdrop eligibility can be checked on the frontend webpage: https://claims.eigenfoundation.org/.

EigenLayer opens airdrop eligibility check! The first stage will focus on re-staking users, with Pendle distributing in the second stage.

EIGEN Token Utility

Intersubjectively Attributable Faults

Currently, in the Web3 ecosystem, some types of errors cannot be resolved solely through blockchain mathematics or encryption. For example, the price of Bitcoin exchanged for US dollars relies on oracles.

Currently, Ethereum's network security relies solely on Ethereum's PoS network consensus, which can only protect the on-chain world, such as token quantities, NFT holders, DeFi liquidation rules, and on-chain governance outcomes.

Whenever off-chain information is involved, additional risk assumptions need to be introduced, such as the need for oracles to assist in token-to-dollar price predictions and corresponding storage facilities for data availability (DA).

The EigenLayer team refers to errors generated based on these risk assumptions as Intersubjectively Attributable Faults, which are problems caused by trust assumptions between the blockchain and external entities. Although blockchain alone cannot determine these errors, they can be identified through external observation and consensus among observers.

While malicious behavior on-chain can be mitigated through smart contracts implementing slashing, it is insufficient for errors between different entities. This is because from within the EVM, it is not clear whether intersubjectively attributable faults have occurred, but it is evident to external observers.

Ensuring the accuracy of external data outside the blockchain is the most important utility of the EIGEN token. However, let's first discuss existing solutions: social consensus.

Solving Intersubjectively Attributable Faults: Social Consensus

The current approach to addressing intersubjectively attributable faults is to utilize social consensus. Mechanisms existing in the industry to address situations where the results proposed by an individual differ from the majority of participants include:

• Reducing the stake of the participant, usually in tokens
• Establishing a committee to address the participant
• Using forks to reduce the stake of the participant

The first two mechanisms are prone to majority violence, and besides professional node operators actively responding to tasks, other stakeholders may be negatively impacted. The third mechanism involves social consensus and can still reduce the stake of the participant even in cases of corruption among the majority of node operators.

Therefore, the EIGEN token will utilize the third mechanism to prevent and optimize intersubjectively attributable faults.

The EIGEN token is responsible for ensuring intersubjectively attributable faults within the Ethereum ecosystem, addressing risk assumptions beyond the jurisdiction of smart contracts.

EIGEN Token Ensuring Security through Forking Mechanism

The value of tokens comes from external reference frameworks or social consensus, and token forking is a mechanism in value distribution that utilizes these external reference frameworks for cryptographic economic penalties.

The core idea is that if a failure is triggered by the misconduct of the majority of EIGEN token stakers, any challenger can create a token fork, where malicious EIGEN token stakers will be slashed in that fork.

After forking, there will be two possible versions of the EIGEN token, and users and AVS can freely decide which version to respect and value. If the majority believes that the misconduct of the slashed stakeholder is unjust, users and AVS will prioritize the new fork over the original EIGEN distribution.

In the forked token, malicious stakers receive no allocation, thus losing the original value of their stake. This mechanism is referred to as "slashing-by-forking" in the industry.

It is evident that a fundamental principle of the EIGEN token is that only when the fault of EIGEN token stakers is beyond doubt and widely known in the market, and any two rational observers would agree that punishment is warranted, can slashing of EIGEN token stakers be successfully carried out. In such cases, slashing requires significant collusion and potential financial losses, making the EIGEN fork the last resort but still necessary to ensure correct behavior of token stakers.

To reduce the risk of fork attacks, EIGEN forks require staking of EIGEN tokens. If social consensus validates the fork, challengers will retrieve their tokens and the tokens of the malicious actor as a reward in the fork. However, if social consensus rejects the fork, the challenger's committed tokens will be burned.

To implement this mechanism, EigenLayer will open double-token staking to protect specific AVS. Currently, only EigenDA is open, utilizing dual staking between ETH and EIGEN, where re-staking absorbs ETH to strengthen decentralization within the blockchain network, and EIGEN token staking can support intersubject slashing.

ETH and EIGEN tokens will complement each other to maximize the security of AVS.

Establishment of Eigen Foundation

Eigen Foundation is an independent entity whose mission is to promote the development of the EigenLayer ecosystem, support research and development of the EigenLayer protocol, fund projects, etc.

The Eigen Foundation is also responsible for the current EIGEN token airdrop activity and future resource allocation.