EigenLayer Price continued its downward trend as the sentiment in the cryptocurrency industry worsened and as holders dumped it.
The EIGEN token fell from this week’s high of $4.58 to a low of $3.48, a 24% decline. This drop was a continuation of the sell-off that was happening in OKX’s pre-market futures
EigenLayer’s market cap has dropped from almost $800 million to $686 million while its diluted valuation stands at over $6.1 billion.
EigenLayer airdrop
EigenLayer is one of the biggest disruptors in the crypto industry. It introduced the concept of restaking, which allows holders of staked Ethereum to delegate them in other pools and make returns.
The network has now grown to become the third biggest player in the Decentralized Finance (DeFi) industry, with over $11.2 billion in assets. It has gained hundreds of thousands of users from around the world. This explains why its airdrop was one of the most anticipated events in the crypto industry.
There are a few reasons why the EigenLayer price has dropped after its airdrop. First, the decline happened as many token holders started converting them into fiat currencies. This is a highly common phenomenon when airdrops happen. For example, in July, 41% of all zkSync token holders sold their tokens after its debut.
Increased selling by token holders also explains why many new airdrops like Hamster Kombat, Catizen, and PixelVerse have all dropped. Other tokens like Wormhole and zkSync have also fallen sharply.
Second, there are increasing concerns about future dilution because of the vast number of unlocked tokens. Data by CoinMarketCap shows that EIGEN has over 186 million tokens in circulation against a total supply cap of 1.68 billion.
The implication is that the unlocked tokens will start to vest periodically in the coming months, leading to more dilution. In line with this, many EIGEN holders were disappointed by the limited tokens they were awarded during the airdrop.
Third, the airdrop coincided with a period when most coins were falling. Bitcoin dropped to $61,000 while the crypto fear and greed index moved to the fear zone of 36.
Is EigenLayer token a good investment?
EigenLayer is one of the biggest players in the crypto industry. Unlike meme coins, it has strong fundamentals like strong total value locked and number of users. Like Lido DAO, it generates substantial sums of money in fees, which will flow to stakers.
However, in the near term, there is a likelihood that it will remain in a price-discovery phase as many of its initial holders sell. As we have seen with the likes of Wormhole and zkSync, the post-airdrop dip can continue for a while.
Summary
EigenLayer token has dropped sharply after its airdrop this week. This sell-off will likely continue in the coming weeks. In the long term, the token will likely bounce back because of its strong fundamentals.
