EigenLayer (EIGEN) Describes Itself As

EigenLayer is a middleware blockchain protocol leveraging the Ethereum ecosystem to introduce restaking—a mechanism allowing Ethereum stakers to reuse their staked ETH or Liquid Staking Tokens (LST) to secure additional decentralized services. This approach extends Ethereum's cryptoeconomic security model across a broader ecosystem, enhancing scalability and enabling new applications to benefit from pooled security resources.

The EIGEN token plays a central role in this ecosystem, functioning as a universal intersubjective work token. It is designed to address tasks that involve intersubjectively attributable faults—those agreed upon by external observers but not easily verifiable on-chain. EigenLayer supports developers and operators by fostering a flexible, scalable, and secure environment for decentralized innovation.

Project Function

EigenLayer's primary utility is its ability to consolidate cryptoeconomic security and reduce the fragmentation traditionally seen in blockchain ecosystems. Its key features include:

• Restaking: Ethereum stakers can opt into EigenLayer contracts to reuse staked ETH or LST, contributing to pooled security for additional services and earning rewards.
• Actively Validated Services (AVS): These are decentralized services supported by EigenLayer's ecosystem. Operators perform validation tasks to ensure service integrity, with their work secured by restaked assets.
• Data Availability Solutions: Through innovations like EigenDA, EigenLayer facilitates reliable data storage for dApps and services.

EigenLayer also reduces capital requirements for stakers and enhances trust guarantees for services using its infrastructure, fostering a more integrated Ethereum ecosystem.

Token Utility

The EIGEN token underpins the functionality of EigenLayer, serving as a work token for intersubjectively verifiable tasks. Its primary roles include:

Staking for Fault Attribution: EIGEN tokens secure tasks that are not cryptographically verifiable but require agreement among external observers, such as:

• Data availability: Ensuring network-wide accessibility of data.
• AI inference accuracy: Validating AI predictions within acceptable parameters.
• Oracle price inputs: Verifying the accuracy of real-world data feeds.

Incentives and Penalties: Operators earn rewards in EIGEN tokens for accurate task performance and face penalties for deviations.

Validation Tasks: Operators utilize EIGEN tokens when participating in AVSs, ensuring the reliable functioning of these services.

These utilities aim to position EIGEN as a critical element in enhancing security for diverse decentralized applications within the EigenLayer ecosystem.

About the Founders

EigenLayer was founded in 2021 by Sreeram Kannan, previously an associate professor of electrical and computer engineering at University of Washington (UW). During his time at UW, he also directed the UW Blockchain Lab, which focused on the design of new blockchain infrastructure protocols.  

Risks of EIGEN

Like an investment in other crypto assets, there are some general risks to investing in EIGEN. These include:  (i) volatility risk and liquidity risk, (ii) short history risk, (iii) demand risk, (iv) forking risk, (v) code defects, (vi) regulatory risk, (vii) electronic trading risk, and (viii) cyber security risk. For additional information of these and other general risks associated with crypto assets and Uphold’s platform, please refer to the Risks Specific to Holding Digital Assets statement.

In addition to these general risks, an investment in EIGEN is subject to the following specific risks:

• EigenLayer operates using smart contracts, which have an association with vulnerabilities and security breaches. Despite undergoing successful audits by well-regarded third-party entities, it is essential to acknowledge the existence of inherent risks. 

We emphasize that this Crypto Asset Statement is not an exhaustive description or summary of all risks associated with EIGEN. Investors should conduct their own research and perform their own assessment before trading any crypto asset to determine the appropriate level of risk for their personal circumstances.

The EIGEN community and the EigenLayer founding team are not under any legal or regulatory obligation to disclose material information to the public regarding its activities. Holders of EIGEN have no recourse to Lido DAO, or Uphold if EIGEN declines in value for any reason.

Changes to applicable law may adversely affect the use, transfer, exchange, or value of any of your crypto assets, and such changes may be sudden and without notice.

Uphold’s Evaluation Process

Prior to listing EIGEN on the Uphold Platform, Uphold performed due diligence on EIGEN and determined that EIGEN is unlikely to be a security or derivative under relevant securities legislation. Uphold’s analysis including reviewing publicly available information on the following: 

• The creation, governance, usage, and design of EIGEN, including ensuring the source code is open-source, audited and peer reviewed, security, and roadmap for growth in the developer community. 
• The supply, demand, maturity, utility, and liquidity of EIGEN.
• Any marketing materials put forward by the EIGEN social team including, Twitter, Medium blog, LinkedIn posts, Discord and Telegram channels.
• Material technical risks associated with EIGEN, including any code defects, security breaches and other threats concerning EIGEN and its supporting blockchain (such as the susceptibility to hacking and impact of forking), or the practices and protocols that apply to them.
• Legal and regulatory risks associated with EIGEN, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of EIGEN.