EigenLayer his been hit by criticism after it was revealed that staking rewards received by early investors are not restricted by token lock-ups.

The situation echoes Celestia’s token launch, which was followed by a 75% plunge as investors could sell staking rewards.

The EIGEN token initially rose to $4.39 and has since slumped by more than 20% to $3.57.

In some ways, the release of EigenLayer’s native EIGEN token this week went as expected.

The price surged moments after it was listed on exchanges, leading to a price discovery period culminating in a 22% slide from its momentary record high.

But there appears to be a more serious issue brewing, with investors and community members complaining about a lack of transparency regarding token supply.

EIGEN’s total supply is fixed at 1.68 billion and its circulating supply is 186 million. These figures give the asset a fully diluted value of $5.8 billion and a market cap, excluding tokens not in circulation, of $650 million. The issue many community members raise stems from a portion of those locked tokens, which belong to early investors that bought during heavily-discounted funding rounds.

Investors that bought in EigenLayer’s $14.4 million seed round, $50 million Series A and most recent $100 million raise in February now can stake their locked tokens to yield rewards. As it stands, there are 130 million EIGEN tokens staked. Many believed these were all a part of the claimed tokens but in fact, 70 million of these tokens belong to this small group of early investors.

Data availability protocol Celestia suffered a similar issue following its token launch, as early investors staked their dominant TIA stacks to receive tradable rewards, which many then traded away. TIA has plunged 75% since February.

EigenLayer investor TardFiWhale.eth wrote on X that the project recently updated its documents to state that “Eigen Labs investors are not restricted from staking” and that rewards are not subject to lock-ups. The X post claims this information wasn’t in an archived document from mid-September.

EigenLayer’s blog post on “token disclosures” was last revised on Sept. 30.

“Transparency will enable us to engage in more honest and open discussions about these issues,” TardFiWhale.eth wrote. “I personally believe that allowing investors with locked EIGEN to stake makes sense from a governance perspective, given the complexity and goals of Eigenlayer. However, I also believe that the rewards earned from staking should be locked until the cliff is reached” at the end of the 12-month vesting period.

EigenLayer allocated 86 million tokens to early adopters including node operators and stakers, but even this has led to criticism as whales were able to receive disproportionate rewards compared to the general population. Tron founder Justin Sun received an airdrop worth $8.75 million, almost all of which was deposited to HTX, the exchange formerly known as Huobi, according to data provider Arkham.

EIGEN recently traded at $3.57, having initially surged as high as $4.39, CoinMarketCap data shows.

An EigenLayer spokesperson offered no comment by press time.