KEY TAKEAWAYS
- Eigen Labs proposes ELIP-12 to form an Incentives Committee for optimizing EIGEN token emissions.
- The committee will manage token emissions, focusing on active participants in EigenCloud’s Asset Verification Services.
- A new fee model aims to create deflationary pressure on EIGEN by directing cloud fees to buybacks.
- The initiative seeks to align incentives across the ecosystem, enhancing network security and growth.
Eigen Labs and the Eigen Foundation have introduced a proposal, ELIP-12, to establish a new Incentives Committee aimed at optimizing the management of EIGEN token emissions. This initiative is part of a broader effort to refine the tokenomics of the EigenCloud ecosystem, focusing on enhancing fee revenue and improving allocation efficiency.
The proposed Incentives Committee will be responsible for setting policies that allocate token emissions to participants actively securing the Asset Verification Services (AVSs) and contributing to the growth of EigenCloud. The committee will also explore mechanisms to utilize EigenLayer and EigenCloud fees to benefit EIGEN token holders.
Introducing a New Fee Model
Under the new proposal, the Incentives Committee will implement a fee model for EigenLayer and EigenCloud. This model includes a 20% fee on AVS rewards subsidized by EIGEN incentives, directing these fees to a contract for potential buybacks. As revenue from EigenAI, EigenCompute, and EigenDA grows, 100% of cloud fees after operator expenses will also be directed to this contract. This approach aims to create deflationary pressure on EIGEN by reducing its circulating supply.
Managing Inflation and Directing Revenue
The committee will have a mandate to manage inflation by reducing rewards for idle stake and directing emissions to fee-paying AVSs. This strategy is intended to encourage the productive use of EigenCloud services and shift rewards towards active, slashable, and redistributable stakes.
In addition, the committee will have the flexibility to quickly adjust the allocation of EIGEN emissions without the need for lengthy contract upgrades, allowing for a more responsive approach to emerging opportunities within the ecosystem.
Aligning Incentives Across the Ecosystem
The proposed changes aim to align incentives across the EigenLayer ecosystem, ensuring that stakers and operators backing active services receive more rewards. This alignment is expected to support the long-term growth and viability of the protocol by promoting monetizable growth and enhancing network security.
The transition to the new Incentives Committee will occur in phases, with the goal of stimulating growth across EigenCloud and accruing value to the EIGEN token. For more details on the proposal, visit the official announcement here.
Why This Matters: Impact, Industry Trends & Expert Insights
Eigen Labs’ proposal of ELIP-12 to establish a new Incentives Committee aims to optimize EIGEN tokenomics by managing token emissions and aligning incentives across the EigenCloud ecosystem.
A recent industry analysis highlights a shift from speculative reward programs to sustainable, utility-driven incentives. This trend is reflected in Eigen Labs’ approach to enhance fee revenue and improve allocation efficiency, aligning incentives with product usage.
Insights from industry experts emphasize the need to redesign incentive structures toward mechanisms that reward long-term contribution and align team and user incentives. This supports Eigen Labs’ strategy of reducing short-term selling pressure and promoting long-term engagement by managing inflation and directing emissions to productive uses.
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