Special Report: EigenLayer

Project Overview

Why EigenLayer is an Innovation in the Space

EigenLayer addresses a significant challenge in blockchain infrastructure: the high cost and complexity of securing new protocols. Traditionally, each decentralized application (DApp) or service has to bootstrap its own validator network, which is both capital-intensive and logistically challenging. EigenLayer leverages Ethereum’s existing validator network, allowing projects to "borrow" Ethereum's security without setting up separate validation mechanisms. This model not only reduces overhead for new projects but also increases Ethereum’s utility as a base layer, effectively creating a unified security model for multiple services​. Essentially it allows Ethereum to rent out its security to other protocols benefitting Eth and its entire ecosystem.

In addition to security benefits, EigenLayer introduces EigenDA, a data availability layer tailored for rollups and data-heavy applications. EigenDA increases data throughput up to 15 MB/s, compared to Ethereum’s 80 KB/s, making it ideal for rollups that require high data availability​

Why we like EigenLayer

1. First-Mover Advantage: EigenLayer is the first protocol to implement restaking, a pioneering approach in the Ethereum ecosystem. This unique positioning has allowed EigenLayer to capture early market share and establish itself as the go-to solution for Ethereum-based security outsourcing. Its innovation sets it apart from competitors in the blockchain security and middleware sector, such as Celestia, which also provides modular data availability but lacks the integration with Ethereum's existing validator network​. We highly value first-mover advantage particularly in network effect impacted verticals. As a company gains a network effect it becomes a flywheel that further increases its moat against competitors. In many verticals it pays to simply by the leader rather then bet on competitors even though they may seem like a “better deal” based on market cap.

2. Total Value Locked (TVL) and Ecosystem Growth: EigenLayer’s first-mover advantage has led to a large Total Value Locked (TVL) with over $11B locked. This can enhance its perceived security and attracts even more applications to rely on its restaking services further enhancing its competitive edge. A high TVL not only strengthens EigenLayer’s position but also boosts Ethereum’s overall ecosystem. Currently, its TVL (a common metric for valuing a protocol) is 20x its circulating market cap.

3. Tokenomics and Airdrop Program: EigenLayer’s governance token, EIGEN, is used for staking, governance, and rewards within the network. EigenLayer has launched a multi-season airdrop campaign, allocating 15% of the total EIGEN supply to early participants and contributors. This strategy incentivizes early engagement and helps to establish a strong community around EigenLayer, laying the groundwork for long-term governance and ecosystem growth. Early seasons have concluded but you can still earn points towards future airdrop seasons by staking ETH or Eigen. This added bonus ​can help cap the potential downside to investing in Eigen.

4. Market Cap and Price Action: EigenLayer’s market cap is still emerging as it gradually releases EIGEN tokens through airdrops and staking rewards. Given the growing interest in Ethereum infrastructure and the need for modular security solutions, EigenLayer has the potential to capture a significant market cap. As EigenLayer expands and its adoption among Ethereum stakers grows, EIGEN’s price could see substantial appreciation, especially if it achieves dominance in the modular blockchain infrastructure space.

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