Programmatic Incentives V1 FAQ
What is the Programmatic Incentives V1?
Programmatic Incentives V1 will enable weekly programmatic rewards of EIGEN tokens minted by the protocol. These newly-minted EIGEN tokens (Inflationary EIGEN) will be available for claim by qualifying stakers and the Operators they delegate to. These incentives will be retroactive based on staking since August 15, 2024 and will become claimable every week starting in October 2024. Details and the timeline for claiming are provided below.
In the first year, Programmatic Incentives V1 will distribute 66,945,866.7314 EIGEN, equivalent to 4% of the total initial EIGEN supply of 1,673,646,668.28466 tokens:
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3% to ETH and LST stakers and operators (ETH and LSTs are weighted equally)
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1% to EIGEN stakers and operators
As mentioned above, Inflationary EIGEN will continue to be minted by the protocol based on the programmatic rewards formula codified in the contracts. The inflationary EIGEN issuances will persist unless adjusted through future community governance.
What is the distribution?
Programmatic Incentives V1 is initially configured to distribute EIGEN as follows:
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Linearly Distributed: 1,287,420.51407 EIGEN will be distributed weekly to stakers and operators, based on activities beginning August 15, 2024.
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Proportional to Delegated Stake: EIGEN will be distributed to eligible stakers and operators proportional to delegated stake.
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Fixed Operator Commission: 10% of the distributions (~128,742.051407 EIGEN per week) will go to operators that have received delegations from stakers, and the remaining 90% (~1,158,678.46266 EIGEN per week) will go to stakers. These percentages may change with future updates (more below).
Who is qualified to receive programmatic incentives?
To receive Programmatic Incentives:
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Operators must be registered to at least one AVS
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Stakers must be delegated to an operator that is registered to at least one AVS
However, the ultimate rewards provided by the protocol will depend on the amount of EIGEN (i) staked and delegated by the staker; and (ii) opted in to support at least one AVS by the operator.
The Programmatic Incentives distribution and eligibility configurations will evolve, adapting to the changing needs of the ecosystem to incentivize valuable engagement with protocol features and securing the AVSs built on top. Future updates that are being explored include:
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Rewards Boost: Where EIGEN would be distributed weekly to stakers and operators of each AVS proportional to the amount of rewards distributed by each AVS.
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Rewards Floor: Where a small portion of EIGEN programmatic rewards would be allocated to stakers and operators of AVSs that are not yet distributing rewards.
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Variable Operator Support Rate: Where operator support rates will be flexible, replacing the hard coded 10% operator support rate and enabling the development of a competitive operator network.
How can I claim programmatic incentives?
Programmatic Rewards employs the same protocol Rewards infrastructure that is now available for all AVSs to allocate rewards to stakers and operators and will accrue and be claimable by stakers and operators in the same place and in the same way as Rewards from EigenDA and other AVSs.
Weekly programmatic rewards will be available to claim from the protocol every Tuesday at 19:00 UTC. Below is the anticipated rollout of Programmatic Incentives v1 and the opening of claims for programmatic rewards:
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Thursday, August 15, 2024: Programmatic rewards began accruing to all qualified stakers & operators, as detailed above
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Tuesday, October 1, 2024: Rewards accrued may appear in third-party applications, like the EigenLayer dApp, as ‘Lifetime Earned Rewards.’ These third-party figures should be expected to be updated daily.
(Note: Eigen Foundation does not operate the EigenLayer dApp or any of third-party application. Please see our Terms of Service for more information on Third-Party Services and Materials.)
- Tuesday, October 8, 2024: Claiming becomes available for qualified stakers and operators.
Accrued weekly programmatic rewards will not expire and can be claimed at any time after they accrue, beginning on Tuesday, October 8, 2024:
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Direct Stakers and Operators: Direct stakers and operators will be able to claim via the EigenLayer dApp, CLI, or directly via smart contract.
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LRT Stakers: LRT protocols will accrue weekly programmatic rewards, and LRT users should engage with their respective LRT protocols to understand how rewards will be managed.
Why are we pursuing Programmatic Incentives?
This upcoming release marks a significant milestone for EigenLayer and the broader restaking ecosystem as EigenLayer transitions from retroactive incentives (stakedrops) towards a protocolized system of continuous rewards via Programmatic Incentives. This protocol rewards system has key benefits:
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Providing predictable rewards
Credible commitments to distribute rewards to stakers and operators actively providing restaked security. -
Subsidizing restaking marketplace
A base level of rewards for stakers and operators effectively lowers the cost of restaked security for AVSs. -
Strengthening Incentive Alignment
Qualification criteria encourage positive actor participation. Stakers must now delegate, and operators must run an AVS to qualify for programmatic rewards.
How does the Programmatic Incentives V1 work under the hood?
Once per week, anyone can trigger the TokenHopper contract, which reads from the Action Generator contract to get the list of actions to perform. This system has been configured so that the TokenHopper mints new bEIGEN tokens, wraps them to unlocked EIGEN, and then distributes them via creating a “Rewards Submission for All Earners” in the RewardsCoordinator contract.
This Rewards Submission is subsequently picked up by the Rewards Pipeline, with a Merkle root reflecting the distribution eventually posted (currently roots are posted on a 1-week cadence). Claims can be made against the root following a 1-week proto-fraud proof-period (also referred to as a “baking period”) after the root is initially posted.
Reference figure here.