EIGEN Token Price Drops Due to Unclear Utility and Selling Pressure

Price Drop Analysis

According to ChainCatcher news, analysts at Four Pillars have highlighted the decline in the price of the EIGEN token of the restaking protocol EigenLayer, which has been trading between $3 and $4 since its listing on October 1. This marks a significant drop from its earlier over-the-counter market price of $13. The main reasons attributed to EIGEN’s poor performance are the unclear utility of the token and the selling pressure from airdrops.

Complex Concept of EIGEN

In the white paper released in April 2024, EigenLayer defines EIGEN as a “Universal Intersubjective Work Token” with functions related to cross-chain universality, network task execution capability, and addressing subjectivity failures. However, these intricate functions are challenging for regular investors to grasp, impacting the token’s perceived value in the market.

Selling Pressure from Airdrops

Of the 185 million EIGEN tokens circulating, around 46% (86 million EIGEN) were distributed through airdrops, including allocations to institutional investors and prominent crypto whales. Notably, Justin Sun and GCR reportedly moved airdropped EIGEN tokens worth millions to centralized exchanges, exacerbating the selling pressure. Additionally, a recent hacker attack resulted in the theft of approximately 1.67 million EIGEN, further eroding market confidence.

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