EigenLayer Airdrop Fallout: Ecosystem Interests and Lack of Oversight
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EigenLayer Airdrop Fallout: Ecosystem Interests and Lack of Oversight
Eigen Labs employees received millions of dollars in payments from other projects that rely on its technology, raising concerns about potential conflicts of interest.
Navigating Web3 tides with focused insightsAuthor: Sam Kessler & Danny Nelson
Translation: TechFlow
Sreeram Kannan, founder of EigenLayer, at ETH Denver 2024 (Danny Nelson/CoinDesk)
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Eigen Labs, the company behind the "restaking" powerhouse EigenLayer, distributed a list of employee wallet addresses to ecosystem projects preparing to launch crypto tokens.
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Some teams said they had requested the list from Eigen Labs, but one team said it did not request it and felt pressured by the company to send tokens to its employees.
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Experts and industry insiders noted that these payments—peaking near $5 million—raised concerns about conflicts of interest.
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Eigen Labs and the nonprofit Eigen Foundation later banned such payments to employees.
Transparent blockchains were once touted as a cure for Wall Street-style backroom deals, but instead paved the way for a new class of insiders. Many consider EigenLayer one of the most promising projects within the vast Ethereum blockchain ecosystem. The application offers a “trust-minimized neutral” platform for building blockchain applications and securing them against theft and cyberattacks. Yet this neutrality comes with a major caveat: CoinDesk’s investigation found that employees at Eigen Labs accepted millions of dollars in payments from other projects relying on its technology—raising questions about potential conflicts of interest.
One team told CoinDesk it sent portions of its new cryptocurrency to each Eigen Labs employee as a “thank you,” with individual allocations ultimately worth $80,000 per employee.
Another team said Eigen Labs sent them a list of wallet addresses and felt compelled to pay—otherwise risking their relationship with a company that could influence their business.
At their peak during the summer lull in crypto markets, payments solicited by Eigen Labs employees approached $5 million—nearly $1 million as of publication. Some senior staff who received token payouts now work at the Eigen Foundation, the nonprofit that grants funding to projects using EigenLayer technology.
Eigen Labs and the Eigen Foundation quietly banned employee payments this year, acknowledging the practice could create conflicts of interest—or at least the appearance of them.
“Eigen Labs and its foundation are called ‘trust-minimized neutral,’ which means they have a responsibility to avoid any appearance of bias or favoritism,” said Cessiah Lopez, a crypto researcher at nonprofit VentureESG and a researcher at Cambridge University’s Minderoo Centre for Technology and Democracy. “Actions that might be interpreted as contradicting this principle could raise concerns, even if carried out without malicious intent.”
Airdrop Assistance
Founded by Sreeram Kannan, an associate professor of electrical and computer engineering at the University of Washington, EigenLayer helped fuel the latest boom cycle in crypto in 2023 by pioneering “restaking,” a novel blockchain security mechanism that also became a lucrative investment opportunity. The platform raised over $100 million in venture capital in less than a year and attracted $15 billion in user deposits—a massive sum even by blockchain standards.
In early 2024, more than ten blockchain applications rushed to launch on EigenLayer, including cloud computing services and data storage platforms. Joining the wave were “liquid restaking” providers that make depositing into EigenLayer more user-friendly.
These new applications burned through millions in venture funding and launched cryptocurrencies sometimes valued in the billions. They conducted airdrops to distribute their new tokens.
In the process, Eigen Labs was helping its employees receive those airdrops by sending out a list of wallet addresses—the crypto equivalent of bank accounts. The company insists it only did so when projects requested it.
“For projects wishing to airdrop to Eigen Labs, we provided a list of all Eigen Labs employee addresses,” the company said in a statement to CoinDesk. Eigen Labs only sent the list to “teams that reached out to Eigen Labs or its employees regarding an airdrop,” reiterated Alan Curtis, the company’s chief commercial officer. However, one team told CoinDesk that Eigen Labs sent them the list despite no such request. Developers from the project, speaking anonymously, said Eigen Labs expected rewards via airdrops for its employees. Given Eigen Labs’ influence, the request was hard to ignore. Eigen Labs said it helps many teams coordinate airdrops to other projects in the restaking ecosystem by collecting wallet address lists and making introductions.
“This aligns closely with our vision of a coordination engine where projects help, reward, and collaborate with one another to build an EigenLayer ecosystem greater than the sum of its parts,” the company said in its statement—even as it banned payments to its own employees in May.
Tracking the Funds
CoinDesk reverse-engineered the wallet list by compiling a roster of all Eigen Labs employees and cross-referencing it with wallets and NFT holdings disclosed by employees on social media.
A pattern emerged. These wallets—and other “ephemeral” addresses interacting almost exclusively with crypto exchanges—were receiving identical token amounts from three different airdrops: Ether.Fi, Renzo, and AltLayer. CoinDesk then verified a significant sample of this reverse-engineered list, confirming details with insiders familiar with the actual Eigen Labs list.
According to CoinDesk’s analysis, AltLayer allocated 46,512 ALT to each Eigen Labs employee, Ether.Fi gave 10,490.9 ETHFI per person, and Renzo distributed 66,667 REZ each. At price peaks, these airdrops were worth approximately $30,000, $80,000, and $16,666 respectively.
On-chain records show Eigen Labs employees collectively claimed 487,928 ETHFI (peaking at $3.5 million), 1,733,342 REZ (peaking at $433,300), and 1,539,563 ALT (peaking at $1.02 million) between late January and mid-June 2024.
A Very Weird Crypto Thing
Several industry figures who spoke with CoinDesk said airdrops to Eigen Labs employees are common in the crypto industry—an informal, albeit rarely discussed, perk enjoyed by employees well-connected to blockchain startups.
“It’s a very weird crypto thing—people occasionally just hand out free money,” said Mike Silagadze, CEO of Ether.Fi.
Silagadze said Ether.Fi airdropped tokens to employees at several companies, including Eigen Labs, as a form of “thanks.”
He added that Ether.Fi prefers sending tokens directly to individuals rather than companies because it feels “more personal.” He requested a list from Eigen Labs so employees could receive the airdrop, and the company sent him a list of 50 wallet addresses—with no names attached.
“They specifically mentioned Sreeram wasn’t involved,” Silagadze said, referring to Eigen Labs CEO Kannan. “Given the team size, it was probably everyone else.”
(CoinDesk’s parent company Bullish is an investor in Ether.fi.)
Others believe payments to Eigen Labs employees are inappropriate. A crypto protocol founder familiar with the Eigen Labs payouts, speaking anonymously, described the practice as “abuse of power.” “It’s one thing for a company to issue tokens to another company for business reasons, but issuing tokens to individual team members is completely abnormal—even by crypto standards,” the founder said.
In his view, Eigen Labs’ outsized influence in the restaking space means it could selectively promote or favor projects that pay its team members. Eigen Labs frequently highlights projects on social media and hosts invitation-only networking events for ecosystem founders—such as a Colorado ski weekend following this year’s ethDenver conference.
The Eigen Foundation controls 15% of all EIGEN tokens and provides grants to projects in the EigenLayer ecosystem. CoinDesk found no evidence that Eigen Labs or the Eigen Foundation used their power to favor projects that paid its employees.
Lack of Standards
Compared to government-regulated public companies, private crypto startups enjoy wide discretion in how they disclose key information, such as token ownership percentages.
When a crypto project launches a token, it typically publishes a rough breakdown of recipients. No pie charts are required; the lack of consistent reporting standards in crypto leaves investors with often incomplete or misleading information.
“Here, token holders are effectively the public [equity] market,” said Christos Makridis, a digital fellow at Stanford University’s Digital Economy Lab, who is researching airdrops. He noted that stock markets have “reporting requirements” designed to protect investors—but these remain uncodified in crypto.
AltLayer was the only project to proactively disclose its allocation to the Eigen Labs team in a January blog post. Aparna Narayanan, head of communications at AltLayer, told CoinDesk the allocations were “tokens of appreciation.”
In contrast, Renzo and Ether.fi disclosed on their tokenomics pages that part of their airdrops were reserved for ecosystem “partners.” Neither mentioned Eigen Labs employees.
Kratik Lodha, authorized representative of the RestakeX Foundation, said, “There was a portion allocated to ecosystem partners, which was not requested by anyone at EigenLayer.” When CoinDesk later asked Lodha whether EigenLayer proactively sent Renzo an unsolicited list of blockchain addresses before its April airdrop (which some might not interpret as an explicit request), he declined to answer.
Cleanup Mode
Eigen Labs scrapped its airdrop policy in May after another controversy made crypto headlines, involving the Swiss nonprofit Ethereum Foundation, which supports the Ethereum blockchain.
The foundation revealed that two lead researchers, Justin Drake and Dankrad Feist, had taken paid advisory roles with EigenLayer, another Ethereum-based project. Community members voiced concerns on X (formerly Twitter) about EigenLayer attempting to influence Ethereum’s development roadmap. Feist and Drake eventually pledged to redirect their compensation to Ethereum community projects, while the Ethereum Foundation revised its conflict-of-interest policy to prevent future incidents.
Eigen Labs told CoinDesk it stopped allowing ecosystem projects to airdrop tokens to its employees in May.
The company also said it introduced a policy “explicitly prohibiting any employee from seeking personal benefit from transactions related to the company.”
Eigen Labs also established that team members are prohibited from selling any airdropped tokens during periods when they hold material non-public information, including standard lock-up periods following an airdrop.
The company said these measures were taken “to ensure trust and transparency.” On June 3, the Eigen Foundation issued a policy change banning employees from “individually soliciting airdrops,” according to a commit record. The foundation cited “concerns about conflicts of interest or the appearance thereof.”
As of mid-June, wallets included in the Eigen Labs list continued to claim tokens. Eigen Labs and the Eigen Foundation said employees who already claimed airdrops are not required to return their tokens.
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