EigenLayer Suffers Sybil Attack as Impersonators Claim 2B EIGEN Tokens During Season 2 Airdrop

EigenLayer, the leading re-staking protocol for Ethereum (ETH), is facing the problem of impersonation during its Season 2 airdrop.

EigenLayer, a leading re-staking protocol for Ethereum (ETH), encountered a problem with impersonation during its Season 2 airdrop. Clusters of wallets flocked to certain validators, aiming to claim a large portion of the 2B EIGEN tokens up for grabs.

However, analysis by Artemis revealed a potential security issue and unfair distribution, with some delegators receiving up to 50% Sybil delegations from connected wallets.

EigenLayer operates on a token-incentive protocol, rewarding EIGEN for engaging with validators and staking. But as observed in Season 1 of the airdrop in May, some delegations were found to belong to clusters of wallets.

The presence of Sybil wallet clusters ultimately devalued the experience for genuine users engaging with EigenLayer for ETH delegation. These clusters unfairly siphoned away an estimated 2M EIGEN tokens, leaving the community at a loss.

EigenLayer did introduce whitelisting to EigenDA, but other services like Swell or Blur interacted readily with Sybil wallet clusters. In contrast, some real users were barred from airdrop farming activities.

CoinSummer emerged as the operator with the largest inflow of Sybil wallet activity. More than 54% of all calls and actions originated with Sybil wallet clusters. While this activity may have sufficed for the airdrop, EigenLayer seemed to be reneging on its promise to enhance Ethereum’s security through fair delegation and staking.

Artemis the Sybil Hunter points out a massive, undetected Sybil attack, with 2 out of the top 15 operators receiving ~50% Sybil delegations. One cluster of 1860 addresses was also discovered.

Sybil wallet owners attempted to assert their legitimacy on social media. In other airdrops, new social media accounts would claim that the wallets from the identified cluster were actually legitimate.

But this campaign was too blatant, with deliberate messages spreading to Discord or through X reposts. The problem was compounded when the Sybils proceeded to cash out quickly, crashing the respective reward token.

In the case of Eigen’s current airdrop season, a similar denial of Sybil wallets is expected. However, the presence of Sybils may also affect the performance of the EIGEN token. In the past, the presence of Sybils has crashed the new assets of tokenless protocols right after the launch.

Fortunately for Eigenlayer, there is no set deadline for the start of trading for EIGEN.

The token will reportedly be used in a new prediction market, serving as a tool for consensus. Until then, Eigenlayer will continue to use staked or re-staked ETH as the basis for voting and consensus. The exact allocation of EIGEN tokens is also unclear, but regular users are unlikely to receive a significant portion. This further opens the opportunity for Sybils wallets to use bots, which try to resemble organic user behavior.

Eigenlayer Loses 25% of Value Locked, Countered by ETH Value

Peak valuation has already passed for Eigenlayer. The protocol earlier peaked at around $20B in value locked. But in the past few weeks, the market correction caused that value to slide to $15B, mostly due to the lower price of ETH.

Currently, Eigenlayer counts only a few hundred daily active users. Two user spikes in May and June coincide with the most active airdrop dates. The presence of concentrated activity in the span of a few days also suggests Sybil activity. The Swell operator also shows similar activity spikes in May.

The Eigenlayer ecosystem of tokens, however, is still performing well. The tokens related to Eigenlayer are valuated at a total of more than $58B in market capitalization. That valuation may be fluctuating, and depends on a handful of top protocols, including Pendle and Ethena.

But the biggest source of value for Eigenlayer is ETH itself. The protocol still holds more than 72% of its value in direct ETH tokens, while aggregating various types of staked ETH from simpler staking protocols.

Initially, Eigenlayer carried most of its assets in stETH from LidoDAO. But since January, the share of ETH has increased continuously, potentially making the underlying protocol more secure.

In the past few weeks, there is also increased stETh activity, which is much more volatile. Since June, stETH has been deposited and withdrawn with increasing frequency. That activity can also be counted toward potential airdrops.

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