Karak has ‘good chance’ of becoming next EigenLayer after EIGEN airdrop disappointment

    01 May 2024

    Emerging Ethereum restaking protocol Karak’s total value locked (TVL) rose over 25% in the past week to over $440 million, and industry experts believe it could start eating into EigenLayer’s market share.

    Following the disappointment around the EigenLayer airdrop, Karak has a “good chance” of become the next big restaking protocol, according to Anndy Lian, intergovernmental blockchain expert and author of NFT: From Zero to Hero. He told Cointelegraph:

    “Karak supports a broader range of assets for restaking, including Ether, liquid staking tokens, liquid restaking tokens, stablecoins, liquidity provider tokens and Wrapped Bitcoin. This diversity could attract a wider user base looking for more options beyond ETH.”

    At the beginning of April, Karak closed a $48-million Series A funding round, giving it a valuation of over $1 billion, which means more upside potential. By comparison, EigenLayer has a $15.7-billion valuation, making it the largest restaking protocol on Ethereum.

    EigenLayer airdrop disappointment could lead to a drop in TVL

    On April 29, EigenLayer released a white paper for its upcoming EIGEN token, which banned several jurisdictions from its upcoming airdrop, including the United States, Canada and several African and Asian countries.

    The decision caused widespread criticism in the crypto community. Pseudonymous crypto trader Jay noted that it could be a significant opportunity for Karak in an April 29 X post:

    “Think Eigen has handed Karak a golden opportunity.”

    EigenLayer’s decision to ban airdrop participants from key crypto jurisdictions could lead to a fall in TVL as stakers look for more lucrative alternatives, according to Lian. He said:

    “Farmers and stakers who were eagerly anticipating the EIGEN airdrop might now seek alternative platforms or protocols. Some may choose to reallocate their assets to other DeFi projects that offer more inclusive airdrop opportunities.”

    According to crypto analyst and Crypto Banter podcast host Ran Neuner, EigenLayer is a venture capitalist (VC) scam aiming to attract liquidity from unsophisticated retail investors. He wrote in an April 30 X post:

    “Early VCs get in early at small valuations — Retail will get in at $15bn+. Low circulation high [fully diluted valuation] at the start — let’s fleece more retail…”

    Neuner argued that the airdrop ban in key unbanked jurisdictions, along with the decision to keep airdropped EIGEN tokens locked until the team decides, are mainly in favor of early-stage VC investors:

    “Any retail investor that buys this in the first 3 years will be punished.”

    While Karak could become the next leading restaking protocol, multi-asset restaking could introduce more protocol risks compared to EigenLayer, according to Alon Muroch, CEO of SSV.Labs. Muroch told Cointelegraph:

    “With more complexity comes more risk. EigenLayer has put its eggs in the Ethereum basket because Ethereum is the most secure and battle-tested proof-of-stake network and, therefore, a safer foundation for shared security.”

    Source: https://cointelegraph.com/news/karak-good-chance-becoming-next-eigenlayer

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