Eigenlayer token retreated by over 2% after launching one of the most anticipated airdrops of the year.

EIGEN slips after its airdrop EigenLayer (EIGEN) retreated to a low of $3.61, giving it a market cap of $717 million.

Eigenlayer (EIGEN) token price slipped by over 2% on April 27, despite launching one of the most anticipated airdrops of the year.

EIGEN retreated to a low of $3.61 on Thursday, giving it a market cap of $717 million. Out of a total supply of 1.68 million tokens, only 186 million were in circulation.

At the current price, its fully diluted value (FDV) stood at $6.4 billion. This helped most participants in a Polymarket poll, which had over $5.4 million in assets, get the prediction right.

96% of the participants predicted that the token would have an FDV of less than $10 billion. On the other hand, 2% predicted that the valuation would be between $10 billion and $15 billion.

Three reasons why the EIGEN token retreated

There are three likely reasons why the EIGEN token retreated from its highs. First, only a small amount of the tokens were released during the airdrop. This means that holders can expect more dilution in the future as the rest of the tokens are brought to the market.

Second, the retreat happened because of the general state of the crypto market, where most coins were in the red. For example, Bitcoin (BTC) retreated by 1.3% to $62,700, while the total market cap of all cryptocurrencies fell by 1.13% to over $2.23 trillion. In most periods, newly launched tokens often drop when the broader market is not doing well.

Finally, the EigenLayer token likely retreated as many of the airdrop recipients exited some or all of their positions. This is a common occurrence with airdrops. For example, Hamster Kombat, the popular tap-to-earn token, has dropped by over 50% after its airdrop last week.

Other popular tokens dropped sharply after launching their airdrops this year. For example, Wormhole (W) has fallen by 82% from its all-time high. Similarly, ZkSync, Notcoin (NOT), and Catizen (CATI) have all fallen after their debut.

EigenLayer is now one of the fastest-growing players in the decentralized finance industry, with over $11.75 billion in assets and $150 million in venture investment. It is the third-largest one after Lido DAO and AAVE.

The network introduced the concept of restaking, where users re-stake their previously staked assets back to a staking pool. By doing so, users earn two compounding returns over time.