Coming Soon: AVS Rewards and EIGEN Programmatic Incentives

Summary

• Actively Validated Services (AVSs) are gaining the ability to reward stakers and operators.
• At least 4% of EIGEN's total supply will be distributed to stakers and operators via upcoming programmatic incentives.
• These incentives will be distributed via "rewards-boosts" in which stakers and operators will receive EIGEN in proportion to the amount of rewards distributed to them by AVSs.
• Stakers and operators that support more AVSs will tend to receive more EIGEN programmatic emissions.
• This rewards-boost program is designed to kickstart the rewards flywheel and enable price discovery even if initial AVS rewards are low.
• Separate from the programmatic incentives program, the Season 2 stakedrop will reward current stakers and operators.
• Details on Season 2 will be announced by the Eigen Foundation soon.

Introducing AVS Rewards

EigenLayer first launched contracts to mainnet on June 14, 2023. Today, EigenLayer has 4.8 million ETH and 108 million EIGEN restaked; 300+ operators running Actively Validated Services (AVSs); and 16 launched AVSs, with many more incoming.

The ultimate vision of the EigenLayer protocol is to be a permissionless marketplace for any blockchain protocol to elastically rent stake and high quality operator sets using both objective and intersubjective slashing conditions.

In the coming weeks, we take another major step toward this goal: the EigenLayer protocol will launch initial Rewards functionality, through which stakers and operators will be rewarded for their participation in securing EigenLayer AVSs. For the first time, token-based rewards will begin to flow through the protocol directly from AVSs to stakers and operators. This is an important step towards enabling price discovery for the value of stake and compute provided via EigenLayer.

Boosting Rewards with Programmatic Incentives

Rewards enables AVSs to distribute tokens to their stakers and operators. Given the newness of the functionality, we expect AVSs to take time to integrate their systems with rewards. In the beginning, total rewards distributed directly by AVSs will likely be small. Blockchains like Bitcoin and Ethereum have solved this startup challenge in the past with programmatic rewards for participants who operate and use the protocol.

In order to activate the AVS rewards flywheel in EigenLayer, there will be a new programmatic incentives program designed for AVS “reward-boosts”, in which EIGEN will be automatically distributed to stakers and operators of each AVS proportionate to the amount of rewards distributed by each AVS. In effect, stakers and operators will receive more programmatic emissions by supporting AVSs that distribute more native rewards. Thus, the programmatic incentives program can be thought of as "boosting" the rewards paid by AVSs to their stakers and operators with EIGEN emissions.

For the first year, at least 4% of the total supply of EIGEN will be distributed via this program.

The goal of this design is to incentivize AVSs to begin distributing rewards to stakers and operators early, in order to benefit from and obtain a larger share of the early EIGEN programmatic incentives.

To support the growth of AVSs who are not ready to distribute rewards on Day 1, a small portion of EIGEN incentives will also be allocated to stakers and operators of AVSs that are not yet distributing rewards. This sets a rewards floor outside of the rewards-boost design, so all legitimate AVSs can distribute some rewards to stakers and operators. In this way, new AVSs are encouraged to join the EigenLayer ecosystem even if they are not ready to distribute rewards on their own.

After Rewards launches in the coming weeks, the programmatic incentives program will follow in the ensuing months. In the interim, the Eigen Foundation will share more details and specifications about the program: how exactly it will work, exactly how much EIGEN will be distributed programmatically, and how AVSs can most effectively participate.

Furthermore, the Season 2 distribution to stakers and operators is separate from these programmatic incentives, and details on that will be announced by the Eigen Foundation soon.

Interacting with Rewards

Stakers/Operators

Rewards, when available, will be claimable via both app.eigenlayer.xyz and the eigenlayer-cli. Please see the "Claim Rewards" documentation for a guide to claiming staker and operator rewards.

Note that because slashing is not live, operators can opt into as many AVSs as possible to earn rewards, with no incremental slashing risk. If operators are worried about future slashing risks, they should consider that EigenLayer will include a mechanism called "unique security" under which operators will be able to specify the amount of stake available to be slashed by each particular AVS that they are running. This is designed to mitigate slashing cascade risks that exist in other models. More details on unique security will be shared before the launch of slashing on EigenLayer.

AVS Developers

For full details on using Rewards as an AVS, please see the "AVS Integrations" documentation. For technical support, to discuss the Rewards roadmap, or to share feedback , please contact our team at [email protected].

As a preview, AVSs can customize a number of parameters in their rewards:

• Which ERC-20 token to use as a reward
• How much of that token to distribute
• Whether rewards should be distributed to past, current, or future stakers and operators, enabling retroactive rewards as well as credible commitments for future rewards
• Specific distribution logic for operators: While more distribution types will be added in the future – such as equal distribution across all operators, distributions proportional to AVS-specific parameters, and vested rewards – at launch Rewards will allow distribution to operators proportional to stake.
• At launch, operator commissions are fixed at 10% of rewards, and stakers at 90%. Variable operator commissions and other commissions logic are high priority roadmap items to be added in a future release.

The Future of EigenLayer

We appreciate your support and faith in the EigenLayer ecosystem. As the protocol continues to mature and become more fully-featured, and as the AVS ecosystem continues to grow in leaps and bounds, we expect the economy of EigenLayer to blossom and for stakers, operators, and all ecosystem participants alike to benefit. 

We look forward to building the future together with you!