EigenLayer Introduces AVS Rewards and EIGEN Programmatic Incentives

EigenLayer is poised to introduce new rewards and incentives aimed at benefiting stakers and operators within its ecosystem. According to EigenLayer Blog, the Actively Validated Services (AVSs) will soon gain the ability to reward participants, marking a critical development in the protocol's evolution.

AVS Rewards and Programmatic Incentives

The upcoming programmatic incentives will see at least 4% of EIGEN's total supply distributed to stakers and operators. These incentives will be delivered through a 'rewards-boost' mechanism, where participants receive EIGEN in proportion to the rewards distributed by AVSs. This mechanism is designed to kickstart the rewards flywheel and enable price discovery, even if initial AVS rewards are low.

Moreover, the Season 2 stakedrop will reward current stakers and operators, with further details to be announced by the Eigen Foundation soon.

Introducing AVS Rewards

EigenLayer, which launched its mainnet contracts on June 14, 2023, currently boasts 4.8 million ETH and 108 million EIGEN restaked, with over 300 operators running AVSs and 16 launched AVSs. The protocol aims to be a permissionless marketplace for blockchain protocols to elastically rent stake and high-quality operator sets.

In the coming weeks, EigenLayer will launch its initial Rewards functionality, allowing stakers and operators to be rewarded for their participation. This marks a significant step towards enabling price discovery for the value of stake and compute provided via EigenLayer.

Boosting Rewards with Programmatic Incentives

The rewards functionality enables AVSs to distribute tokens to their stakers and operators. Given the newness of this functionality, AVSs are expected to take time to integrate their systems. Initially, the total rewards distributed directly by AVSs will likely be small. To address this, EigenLayer will introduce a programmatic incentives program designed for AVS 'reward-boosts,' in which EIGEN will be automatically distributed to stakers and operators based on the rewards distributed by each AVS.

For the first year, at least 4% of EIGEN's total supply will be distributed through this program. This design encourages AVSs to distribute rewards early to benefit from a larger share of the early EIGEN incentives. Additionally, a small portion of EIGEN incentives will be allocated to stakers and operators of AVSs that are not yet distributing rewards, setting a rewards floor outside of the rewards-boost design.

Interacting with Rewards

Stakers and operators can claim rewards via both app.eigenlayer.xyz and the eigenlayer-cli. Operators can earn rewards by opting into as many AVSs as possible without incremental slashing risk, as slashing is not yet live. EigenLayer will include a 'unique security' mechanism to mitigate future slashing risks.

AVS developers can customize various parameters in their rewards, such as the type of ERC-20 token used, the amount distributed, and the distribution logic for operators. Full details can be found in the 'AVS Integrations' documentation.

The Future of EigenLayer

As EigenLayer continues to mature, the protocol expects the AVS ecosystem to grow significantly. The introduction of AVS rewards and programmatic incentives is anticipated to benefit all ecosystem participants, fostering a blossoming economy within EigenLayer.