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– What’s Worth Knowing: The Eigen Foundation has unveiled a management initiative aimed at introducing fresh incentives for its EIGEN token, revamping the protocol’s rewards approach with an eye on productive online activity and revenue generation.

As envisioned, a newly formed Incentive Committee will oversee token issuance, prioritizing those who provide proven active services and contribute to the growth of EigenCloud.

The initiative includes a payment scheme that redirects revenue from AVS and EigenCloud rewards back to EIGEN holders, potentially creating a deflationary impact as the ecosystem grows.

the organization behind the updated EigenLayer protocol has proposed adjusting the governance framework to introduce new incentives for the EIGEN token, with a focus on productive networking and revenue generation.

As outlined in a recent blog post, a key element of the proposal is the introduction of a reward model that directs revenue from payments for actively verified services (AVS) and EigenCloud services back to EIGEN holders. AVS are blockchain services that utilize EigenLayer’s security mechanisms, relying on tokens and operators to maintain integrity and correctness. {

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the team believes that this transformation will strengthen the long-term value for EIGEN holders and better synchronize tokenomics with the actual use of the EigenLayer network.

This path harmonizes the interests of the entire system: Stakers and operators supporting running services get more, AVSs get the capital they need, and EIGEN benefits from improved tokenization, the blog post reads.

EIGEN, the native asset of EigenLayer, has fallen 91% in value this year, losing nearly $700 million in market value amid a general downturn in the crypto market.

EigenLayer is an Ethereum-based protocol that allows users to “reinvest” their crypto assets to protect other blockchain services, effectively leveraging Ethereum’s security in new applications.

At launch, the idea generated a lot of interest from developers, investors and traders, making EigenLayer one of the most talked about projects in the cryptosphere. Over time, however, the excitement faded due to the increasing complexity of the system and questions about incentives, risks and prospects for long-term value.

However, the fund is now looking to revamp the network and expand its reach through a new initiative.

Under the proposed mechanism, 20% of AVS awards that were previously covered by EIGEN incentives can be redirected into a contract designed to buy back tokens. This will reduce the amount of circulating tokens as the ecosystem develops.

Fees from cloud services such as EigenAI, EigenCompute, and EigenDA will similarly be diverted to the buyback after transaction costs are covered.

The revision of the governance framework is due to the limitations of the current “Program Incentives” model, an approach to remuneration that previously relied on the issuance of new tokens to increase supply and attract stakers and operators.

Although in past iterations EIGEN tokens have been issued weekly to support restacking and AVS participation, the team believes that this one-size-fits-all model has overburdened the network in recent weeks.

To oversee the new arrangement, an “Incentive Committee” will be established to distribute funds to participants who are actively providing AVS and contributing to the growth of EigenCloud.