The Eigen Foundation has announced a strategic initiative to increase rewards for active restakers within the EigenLayer network. This plan introduces a newly formed Incentive Committee tasked with managing token emissions and prioritizing participants who secure Active Validated Services (AVSs).
In its proposal, the Eigen Foundation outlines a fee model intended to redirect revenue from EigenCloud services and AVS rewards back to holders of EIGEN. The AVS services leverage the security provided by EigenLayer, relying on staked tokens and operators to ensure their proper and honest functioning. The Foundation believes this shift in the reward strategy could foster deflationary pressure as the ecosystem grows.
According to the Eigen Foundation, these modifications aim to enhance the long-term value for EIGEN token holders while aligning the tokenomics with the practical use of the EigenLayer network. This approach is designed to harmonize incentives across the Eigen ecosystem, allowing restakers to earn more, AVSs to access necessary capital, and EIGEN to experience improved token dynamics.
The proposed ELIP-12 seeks to establish the Incentives Committee, which will implement three main improvements. First, the Committee will collect and utilize fees from EigenLayer and EigenCloud to benefit holders of EIGEN. A suggested 20% fee on AVS rewards, subsidized by EIGEN incentives, will be enforced. Only those AVS that pay fees will qualify for staker and ecosystem incentives, with the fees directed toward a contract designated for repurchases.
Secondly, the Incentives Committee will focus on reducing rewards for inactive stakes, steering EIGEN token emissions toward fee-paying AVS and designing incentives for AVS to distribute rewards against those stakes. This means that rewards will increasingly favor productive staking, such as redistributable and slashable stakes, while baseline rewards for idle stakes may decrease over time.
Thirdly, the committee will have the flexibility to direct emissions toward activities that generate fees and encourage growth. They will be empowered to swiftly alter the allocation of EIGEN emissions without the need for lengthy contract upgrades. However, any adjustments to the maximum total emissions will remain under the governance of the Protocol Committee, with changes requiring an ELIP.
Under the new proposal, the weekly minting of EIGEN will be determined by governance but cannot be modified without the Protocol Council”s approval. To facilitate future rewards implementation, these contracts will be managed via upgradable proxies held by the Protocol Council, ensuring they adhere to the same time locks enforced throughout the protocol.
The Eigen Foundation assures that the minting and distribution of rewards will continue to follow the existing Hopper and ActionGenerator mechanism employed for Programmatic Incentives, enabling a smooth transition to the new incentive distribution framework. For the time being, no immediate changes will impact operators and stakers, as rewards will still be emitted weekly until the Incentives Committee proposes alterations.
The comprehensive action plan includes publishing the ELIP for community feedback, with an open call for input if necessary. All comments will be forwarded to the Protocol Council for consideration. Implementation of the proposed structure for the Incentives Committee will occur pending approval, with the Eigen Foundation also drafting a Charter outlining powers, membership rules, transparency requirements, and interfaces with the Protocol Council.
Performance will be monitored against success criteria, with the community and Protocol Council prepared to introduce follow-up ELIPs as required.
