The Eigen Foundation has put forth a new governance proposal aimed at enhancing the reward structure for EIGEN token holders on the EigenLayer network. This initiative seeks to address user feedback indicating that the previous model incentivized passive participation rather than active engagement.
Under the proposed changes, the distribution path for EIGEN token emissions will be revised to link rewards more closely with tangible network activity and the generation of fees. The foundation intends to create an Incentives Committee responsible for directing programmatic token emissions, ensuring that participants who secure Actively Validated Services (AVS) and contribute additional capacity to EigenCloud receive greater incentives.
AVS refers to blockchain-based services that utilize the security of EigenLayer, relying on staked tokens and operators to maintain service integrity. The proposal also introduces a fee model designed to channel revenue from AVS rewards and EigenCloud services back to EIGEN holders, thus strengthening the connection between the token”s economics and actual network utilization.
One of the notable aspects of this proposal is the introduction of a token buyback mechanism. According to the details, 20% of the fees derived from AVS rewards, which were previously subsidized through EIGEN incentives, will be allocated to a fee contract aimed at facilitating these buybacks. This approach intends to decrease the circulating supply of EIGEN tokens while simultaneously expanding AVS activity.
The Eigen Foundation has outlined a similar strategy for cloud-based services, which includes products such as EigenAI, EigenCompute, and EigenDA. After accounting for operational costs, service fees will also contribute to buybacks, further reducing the total circulating supply.
Previously, the Programmatic Incentives model relied heavily on the issuance of new tokens to attract stakers and operators. This model distributed EIGEN tokens weekly to facilitate restaking and participation in AVS. However, the Eigen Foundation has noted that this uniform approach has strained the network recently and failed to distinguish between those who passively participate and those who actively support services.
In conjunction with these changes, the proposal acknowledges the recent market performance of EIGEN, which saw a drastic decline of 91% in 2025, resulting in a loss of nearly $700 million in market capitalization. The Eigen Foundation positions this new proposal as a critical reset, designed to align rewards and fees with productive activities and service revenue, utilizing buybacks as a strategic tool to mitigate circulating supply.
