With the support of top resources and a single-month TVL increase of over 1 billion US dollars, what is so special about Symbiotic, EigenLayer's new re-staking agreement?

On July 4, the total lock-up value (TVL) of the re-pledge project Symbiotic officially exceeded US$1 billion, and it has been less than a month since the project was launched. Previously, Symbiotic’s TVL reached US$200 million in just two days after it was launched. It has been rising since then, and its pledge pool has reached the upper limit many times. When it announced that it would increase the upper limits of multiple re-pledge pools, the project’s TVL soared three times that day.

Symbiotic is also a project favored by Paradigm and Lido, and raised US$5.8 million in the seed round. As a new force in the re-staking track, many people in the industry regard it as a competitor to EigenLayer.

Introduction to Symbiotic

Symbiotic is a shared security system. It is designed to be an extremely flexible, permissionless and reliable lightweight orchestration layer. It allows web developers to adjust and control their own (re)staking methods. Shared security means that multiple networks can share the services and security of the same group of node operators, thereby improving capital efficiency and security.

Similar to EigenLayer, Symbiotic will provide decentralized applications with a scheme called Active Verification Services (AVS) to jointly ensure security. Users are able to re-stake their assets stored in other crypto protocols to help secure these AVSs in exchange for rewards.

But compared to EiegnLayer, Symbiotic allows users to "re-pledge" using Lido's stETH and other popular assets that are not natively compatible with EigenLayer. It can be said that users are allowed to pledge a wider range of tokens, including ERC20 tokens, Ethereum verification Withdrawal certificates and liquidity provision certificates, etc.

In addition, Symbiotic provides more flexible component customization options. While the core protocol is partially defined by the immutable core contract, other components such as staked assets, reward mechanisms, and penalty criteria can be configured as needed by the network or other agents.

Developed by the team that previously created the Stakemind staking service, Symbiotic aims to be “a permissionless re-staking protocol that provides decentralized networks with a flexible mechanism to coordinate node operators and economic security providers.”

Symbiotic protocol features:

Multi-asset support: Symbiotic allows direct deposit of any ERC-20 token, including Lido’s stETH, cbETH, etc. This makes Symbiotic more diverse and efficient than Eigenlayer, which mainly focuses on ETH and its derivatives.

Modular design, customizable parameters: Networks using Symbiotic can choose their collateral assets, node operators, reward and penalty mechanisms, and all participants have the flexibility to opt in or out of the shared security arrangements coordinated through Symbiotic.

Immutable core contract: Symbiotic’s core contract is non-upgradeable (similar to Uniswap), which reduces governance risks and potential failure points, and reduces execution layer risks.

Permissionless Design: By allowing any decentralized application to integrate without approval, Symbiotic provides a more open and decentralized ecosystem.

Core module

Symbiotic protocol consists of 5 interrelated components:

1. Collateral

Symbiotic’s security layer. Collateral is an abstract concept used to represent underlying on-chain assets that are independent of the chain and the asset. Collateral in Symbiotic can include ERC20 tokens, Ethereum validator withdrawal certificates, or other on-chain assets (such as LP positions) without being limited by which blockchains the positions are held on.

2. Vault (Vault, also known as operator staking pool)

Symbiotic’s (re)staking layer. Delegating collateral to a cross-network operator is handled by a vault that can be managed in a custom way (e.g., by a liquidity (re)collateralization provider like Lido or an institutional holder) or via delegation to an operator-specific Vault.

3. Operator (also known as validator, orderer, guardian, caretaker...)

Operators in Symbiotic are defined as entities that run network infrastructure. In proof-of-stake, successful staking providers have established a brand identity and operate across the network. The Symbiotic protocol creates a registry of operators and enables them to opt-in to the network and receive financial support from re-stakeholders via the vault.

4. Resolver (aka Cutting Board, Certification, Dispute Resolution Framework...)

A resolver is an entity or contract responsible for passing or vetoing penalties incurred by an operator on the network it provides services. They are agreed upon by vaults representing economic security providers and the networks for which they provide security.

Resolvers can be fully automated (in the case of objectively provable curtailment violations), or they can take the form of entities such as curtailment committees and external dispute resolution frameworks. Resolvers enable the network and recollateralizers to share collateral with each other by providing an (ideally neutral) third party to arbitrate penalties.

5. Network (also known as application chain, summary, AVS, etc.)

A network in Symbiotic is defined as a protocol that requires a set of distributed node operators to provide trust-minimizing services, such as decentralized ordering of transactions, reaching consensus on off-chain data and bringing it on-chain (oracles), Automate specific protocol functions (Guardians), etc.

Decentralized infrastructure networks can leverage Symbiotic to flexibly gain security in the form of operator and financial support. In some cases, a protocol may consist of multiple subnetworks with different infrastructure roles. The modular design of Symbiotic protocols allows developers of such protocols to define the rules of participation by which participants need to opt-in to these sub-networks.

Symbiotic enables network builders to define, control and adjust their methods of onboarding, incentivizing and punishing operators and their principals (economic collateral providers).

Project News

Symbiotic was launched on June 11, and the deposit pool of stETH reached the upper limit on that day. Since then, Symbiotic has repeatedly announced that the protocol pledge pool has reached its upper limit.

On June 12, Symbiotic tweeted that the protocol reached the pledge limit of 41,290 wstETH within 5 hours. Nonetheless, users can still stake other assets, and with the initial expansion of the protocol, the staking limit will gradually increase and more asset options will be added. Just one day later, Symbiotic stated here that all of the project’s available re-hypothecated assets had reached the staking limit.

On June 27, Symbiotics announced that USDe had reached the staking limit and added USDe and ENA as new re-hypothecation assets. However, the USDe pool hit the hard cap of $50 million just 15 minutes after it opened.

On July 3, Symbiotic, a re-staking protocol invested by Paradigm and Lido, has increased the deposit caps of multiple re-staking pools. This also allowed its TVL to take off directly, breaking through the US$1 billion mark.

Currently, the Symbiotic ecosystem has nearly 20 partners, and the well-known projects are as follows:

On the day Symbiotic was launched, Lido DAO announced that it would cooperate with the re-pledge income platform Mellow Finance and the re-pledge agreement Symbiotic to launch "re-pledge" Restaking Vaults”.

Subsequently, LayerZero Labs announced that Symbiotic will be launched on LayerZero. Through Ethena Labs, Symbiotic will be integrated into the LayerZero DVN framework, allowing users to pledge ENA to ensure cross-chain transfer of Ethena assets. Another staking giant, ether.fi, also announced the launch of Symbiotic-based Liquidity Re-pledge Tokens (LRT) weETHs.

In addition, Ethena Labs also announced that it will cooperate with Symbiotic and LayerZero to pilot a universal re-staking module.

Summary

It was previously rumored that Symbiotic’s rise to the top was due to the rejection of Paradigm’s previous investment in EigenLayer, and it turned to its competitors in anger. At the same time, the market speculates that Lido, the leading staking company, is cultivating new forces in response to the danger of EigenLayer. But in any case, a competitive and intertwined track can better produce high-quality project teams.

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