Why has the recent decline in pledged points become a trend instead? Is it actually EigenLayer’s intention to issue currency?
Researcher Haotian, an expert in the field, expressed his views on the recent market downturn following the token issuance of EigenLayer and LRT projects. He believes that apart from the market misunderstanding the focus of the ecosystem, it is more likely that the EigenLayer team intentionally issued tokens to lower the expectations and market sentiment of the airdrop. This article is compiled and arranged by Chain News. If there are any doubts, please refer to the original text.
Why has the staking ecosystem recently cooled down significantly?
Reason 1: The market misunderstood the focus of the staking industry
Reason 2: EigenLayer issued tokens to intentionally cool down the market
A cooling-off period is beneficial for long-term development
Recently, whether it is Ether.fi or Renzo, the market enthusiasm for these projects diminished quickly after the token issuance. The project volume and token price decreased rapidly. EigenLayer also recently announced the issuance of tokens and airdrops, which seemed to further decrease market interest in this area.
Haotian has provided his own perspective on this matter. He believes that the staking industry has experienced a long period of irrational prosperity, from EigenLayer’s integration to the competition for liquidity among projects such as Ether.fi and Puffer Finance, shaping a massive new competitive and overheated market sentiment.
The market mistakenly considers “whether LRT can accumulate the most liquidity” as the focus of the staking industry’s development. Haotian pointed out that the key to the sustainable development of the staking industry lies in the development of the AVS ecosystem.
Recommended reading:
How will the staking project EigenLayer change the Web3 infrastructure ecosystem?
Reason for recommendation: This article comprehensively explains EigenLayer’s design concepts, problem-solving capabilities, and current development status. It helps to quickly understand the differences and needs of various roles in the ecosystem, including token stakers, node operators, and active validation service providers (AVS).
Whether the AVS network can open up the industry and truly generate profits is the beginning of demonstrating the value of the staking industry. For example, as the first AVS, can EigenDA attract more projects to use its services through the security brought by staking and return profits to the staking ecosystem is the key point.
The core of the staking industry is AVS, not staking projects.
Under irrational sentiment, the market’s expectations and focus are not placed on the landing application level of AVS. Instead, they are replaced by high expectations obtained through the narrative of LRT to attract traffic and assets, which does not provide long-term effective support to the industry.
EigenLayer hurriedly issued the EIGEN token recently and proposed an innovative model of Intersubjectively Attributable Faults, which brought surprise and discussion to the market.
Recommended reading:
How will the EIGEN token issued by EigenLayer be used to protect AVS security?
Reason for recommendation: This article introduces the unique token utility of EigenLayer, which is to manage and reduce the risk of intersubjectively attributable faults among governing entities through the forking function of the EIGEN token.
However, Haotian believes that EigenLayer’s token issuance at this time is actually aimed at cooling down the market, in addition to launching the full functionality of the mainnet. It is more like a move to reduce the recent market frenzy for staking and LRT.
If the staking arms race is further demonized, the pressure on EigenLayer will be exponentially amplified. Any disturbance in the future development of the related ecosystem will trigger a chain reaction in the staking industry.
The market expectation landing of EigenLayer’s token issuance will cool down the trend of the arms race, allowing the market to focus on the support point of the staking industry, the development of the AVS ecosystem, and make the system healthier.
Originally, EigenLayer’s staking was only intended to provide basic security capabilities for AVS, but unexpectedly opened the Pandora’s box of the LRT field. If not guided and controlled, the false prosperity of staking will further amplify the potential liquidity crisis in the Ethereum network.
EigenLayer chose to issue tokens at this time to cool down the market, hoping that the market can focus on the AVS ecosystem rather than just the LRT project. All of these are aimed at promoting a healthier development of the industry and reducing systemic risks.
Although the market seems lackluster at the moment, there are still opportunities to look at the development of the AVS ecosystem. Haotian believes that EigenLayer will be able to extend the security of Ethereum to more diverse services and infrastructures. For Ethereum, which is developing in a modular direction, the potential for practical applications is highly anticipated.
(SOL version of EigenLayer? The staking frenzy spreads to the Solana ecosystem)
EIGEN
EigenLayer
Ether.fi
LRT
Puffer Finance
Renzo
