EigenLayer foundation proposes bigger rewards for active users

The Eigen Foundation has unveiled a governance proposal that would channel 20% of Actively Validated Services (AVS) fees into a buy‑back contract for the EIGEN token, a move intended to reward participants who secure AVSs and expand the EigenCloud ecosystem [1].

New incentive structure

The proposal, outlined in a recent Eigen Foundation blog post, creates an “Incentives Committee” to manage programmatic token emissions. The committee will prioritize allocations to stakers and operators that actively secure AVSs and contribute to EigenCloud services such as EigenAI, EigenCompute and EigenDA [2]. Under the plan, 20% of AVS reward‑related fees—once subsidized by EIGEN incentives—will be sent to a fee contract that purchases and retires EIGEN tokens, reducing circulating supply as the ecosystem grows [1].

Tokenomics context

EIGEN’s price has fallen 91% this year, erasing nearly $700 million in market capitalisation as the broader crypto market contracted [1]. The existing “Programmatic Incentives” model distributed new EIGEN tokens on a weekly schedule to attract restakers and AVS participants, but the foundation argues that a one‑size‑fits‑all approach has strained the network in recent weeks [2]. By shifting from pure token issuance to a fee‑based buy‑back mechanism, the proposal aims to create deflationary pressure while aligning rewards with actual network usage.

Governance and next steps

The Incentives Committee will be composed of community‑selected members tasked with overseeing fee flows and token‑buy‑back operations. The governance change seeks approval through EigenLayer’s on‑chain voting process; if passed, the fee model would replace the current incentive scheme, potentially altering the token’s inflation rate and distribution dynamics [1].

What to watch

• Completion of the governance vote and any resulting amendment to the token‑emission schedule.
• On‑chain execution of the 20% fee allocation to the buy‑back contract once the proposal is enacted.
• Subsequent changes in EIGEN’s circulating supply and market‑cap trajectory over the next quarters.

If the buy‑back mechanism succeeds, it could restore confidence among stakers by tying token rewards more directly to network activity, but the ultimate impact will depend on AVS adoption and the committee’s ability to manage fee flows effectively.