Regulation
EigenLayer features AVS Rewards and EIGEN Programmatic Incentives
Lorenzo JengarJul 27, 2024 2:40 PM
EigenLayer is ready to launch AVS rewards and EIGEN programmatic incentives for the benefit of stakers and operators, distributing at least 4% of the total EIGEN supply.
EigenLayer is set to introduce new rewards and incentives aimed at benefiting stakers and operators within its ecosystem. According to EigenLayer Blog, Actively Validated Services (AVS) will soon gain the ability to reward participants, marking a critical development in the evolution of the protocol.
AVS Awards and Programmatic Incentives
The next programmatic incentives will see at least 4% of the total EIGEN supply distributed to stakers and operators. These incentives will be delivered via a “rewards-boost” mechanism, where participants receive EIGEN in proportion to the rewards distributed by AVS. This mechanism is designed to kick-start the rewards flywheel and allow for price discovery, even if the initial AVS rewards are low.
Additionally, the Season 2 stakedrop will reward current stakers and operators; more details will be announced soon by the Eigen Foundation.
Introducing AVS Rewards
EigenLayer, which launched its mainnet contracts on June 14, 2023, currently boasts 4.8 million ETH and 108 million EIGEN bought back, with over 300 operators running AVS and 16 AVS launched. The protocol aims to be a permissionless marketplace for blockchain protocols to elastically lease high-quality stakes and operator sets.
In the coming weeks, EigenLayer will launch its first Reward Featuresallowing stakers and operators to be rewarded for their participation. This marks a significant step towards enabling price discovery for the value of stake and compute provided via EigenLayer.
Increase rewards with programmatic incentives
The rewards feature allows AVSs to distribute tokens to their stakers and operators. Given the novelty of this feature, it is expected that AVSs will take some time to integrate their systems. Initially, the total rewards distributed directly by AVSs will likely be small. To address this, EigenLayer will introduce a programmatic incentive program designed for AVS “reward-boosts,” where EIGEN will be automatically distributed to stakers and operators based on the rewards distributed by each AVS.
For the first year, at least 4% of the total EIGEN supply will be distributed through this program. This design encourages AVS to distribute rewards early to benefit from a larger share of the initial EIGEN incentives. Additionally, a small portion of the EIGEN incentives will be allocated to AVS stakers and operators who are not yet distributing rewards, establishing a minimum reward cap outside of the rewards-boost design.
Interacting with rewards
Stakers and operators can claim rewards through both app.eigenlayer.xyz and the layer-cli. Traders can earn rewards by opting for as many AVS as possible without the risk of incremental slashing, as slashing is not yet active. EigenLayer will include a “single safety” mechanism to mitigate future slashing risks.
AVS developers can customize various parameters in their rewards, such as the type of ERC-20 token used, the amount distributed, and the distribution logic for operators. Full details are available at ‘AVS Integrations’ Documentation.
The Future of EigenLayer
As EigenLayer continues to mature, the protocol expects the AVS ecosystem to grow significantly. The introduction of AVS rewards and programmatic incentives is expected to benefit all ecosystem participants, fostering a thriving economy within EigenLayer.
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