The EigenLayer restaking protocol has presented a proposal for a governance shift aimed at implementing new incentives for the EIGEN token, emphasizing active network engagement and the generation of fees.
As detailed in a recent blog entry, a primary element of this proposal is the establishment of a fee model that directs revenue from Actively Validated Services (AVS) rewards and EigenCloud services back to holders of EIGEN. AVSs are blockchain-based services that utilize EigenLayer’s security, dependent on staked tokens and operators to maintain integrity and proper functioning.
The team asserts that this transition will enhance long-term value accumulation for EIGEN holders and align token economics more closely with actual usage within EigenLayer’s ecosystem.
“This strategy harmonizes incentives throughout the ecosystem: Stakers and Operators supporting active services will experience greater earnings, AVSs will receive the necessary capital, and EIGEN will benefit from enhanced tokenomics,” the blog states.
EIGEN, the native utility and governance token for EigenLayer, has dropped 91% this year, erasing nearly $700 million in market capitalization amid a broader downturn in the cryptocurrency market.
EigenLayer is an Ethereum-based protocol enabling users to “restake” their cryptocurrency to provide security for other blockchain services, effectively leveraging Ethereum’s security across new applications. Upon its launch, the concept captured significant attention from developers, investors, and traders, establishing EigenLayer as one of the most closely monitored projects in the crypto sector. Over time, however, enthusiasm faded as the system became increasingly intricate, and concerns emerged regarding incentives, risks, and sustained value.
Token buyback
Nonetheless, the foundation is now aiming to revitalize the network and broaden its influence through this new proposal.
According to the suggested mechanism, 20% of AVS reward-related fees, once supported by EIGEN incentives, could be allocated to a fee contract crafted for token buybacks. This initiative will decrease the circulation of available tokens as the ecosystem expands.
Furthermore, fees sourced from cloud services, including EigenAI, EigenCompute, and EigenDA, would also be earmarked for buybacks post-operational costs.
This governance overhaul addresses the constraints of the existing “Programmatic Incentives” model — a reward system that previously relied on issuing new tokens to amplify supply and draw stakers and operators.
While past iterations allocated EIGEN tokens weekly to promote restaking and AVS involvement, the team believes this uniform approach has increasingly burdened the network in recent weeks.
To supervise the new mechanism, a new “Incentives Committee” will be established, focusing on resource allocations to those actively securing AVS and furthering the wider EigenCloud ecosystem.
This committee, composed of representatives from the Eigen Foundation and Eigen Labs, and subject to approval by the Protocol Council, will possess the authority to modify emissions policies without lengthy contract modifications.
The timeline for these changes remains uncertain, but the team indicated that the committee will release those criteria in due course.
If implemented, the proposal seeks to redirect rewards toward tokens that are actively engaged in the network rather than those merely restaked and inactive.
According to the proposal, greater incentives will be allocated to what EigenLayer refers to as “productive stake” — tokens that contribute to the operation and security of active services. Many of these tokens are “slashable,” indicating that holders are at risk of losing funds if the service falters or misbehaves. The intent is to more closely associate rewards with genuine participation and risk rather than passive ownership.
Read more: a16z Bets Big on EigenLayer Again With $70M Token Buy to Back ‘EigenCloud’ Launch
