Analysis: EIGEN's performance has been lackluster since its listing. The main reasons are the unclear utility of the token and selling pressure from airdrops

In a message from ChainCatcher, an analyst from Four Pillars pointed out that since the EIGEN token of the re-pledge protocol EigenLayer was listed on October 1st, its price has been hovering between $3 and $4, a significant drop from the $13 price in the over-the-counter market earlier this year. Analysis shows that unclear token utility and selling pressure from airdrops are major reasons for EIGEN's poor performance.

EigenLayer described EIGEN as a "Universal Intersubjective Work Token" in its white paper published in April 2024, which is a complex concept difficult for ordinary investors to understand. The functions of EIGEN mainly reflect three aspects: cross-chain universality, network task execution function, and ability to solve subjective faults. These complex functions are hard to convey clearly to ordinary investors, affecting their understanding of EIGEN's value.

The selling pressure brought by airdrops is also an important factor contributing to the decline in EIGEN's price. Of the 185 million circulating EIGEN tokens on the market, about 46% (86 million) were distributed through airdrops. This includes tokens allocated to institutional investors and cryptocurrency whales such as Blockchain Capital and Galaxy Digital. In addition, it was reported that Justin Sun and GCR transferred approximately $8.75 million and $1.06 million worth of air-dropped EIGENS respectively into centralized exchanges intensifying sell-off pressures further . Recently announced by EigenLayer Foundation , around 1.67 million stolen due to hacker attacks have further undermined market confidence.