EigenLayer, a pioneer in the re-staking space, has demonstrated remarkable success in attracting capital, becoming a “black hole” in the Ethereum space and becoming one of the largest DeFi protocols in the process. However, Symbiotic’s entry into the shared security space with its “staking any asset” design could bring disruptive changes.
Since launching on the Ethereum mainnet more than a year ago, EigenLayer has absorbed about 5.4 million ETH, worth $20 billion at its peak in early June. The protocol began actively increasing deposit limits and accepting more types of Ethereum in early 2024. By March, deposits increased from less than 1 million ETH to about 3 million. This growth rate has continued after the launch of Karak, a multi-asset re-staking model designed to increase staking returns.
Symbiotic has taken this concept a step further by supporting any ERC-20 asset as collateral for re-pledge. This customization option and flexible re-pledge model enables developers to use a variety of assets to secure their applications. Yesterday, Ethena's native token ENA and its synthetic USD sUSDe collateralized version became the first non-ETH assets to be re-pledged on Symbiotic. sUSDe earns income through Ethereum staking and futures basis trading.
The new sUSDe vault on Symbiotic’s risk management platform Mellow Finance quickly reached its $40 million cap, while the ENA vault was already half full after the first day of deposits. Both Mellow and Symbiotic are backed by Cyber Fund and are part of the Lido Alliance, and currently other Mellow vaults only accept Lido-collateralized Ethereum (stETH).
The Ethena vault has three managers: MEV Capital, Re7 Labs, and K3. Laurent Bourquin, general partner at MEV Capital, said he expects Liquid Recollateralization Tokens (LRTs) to be accepted as deposits in the Symbiotic vault.
Symbiotic's main difference is its "non-differentiation", which allows EigenLayer's LRTs to enter Symbiotic. This will generate double slashing and thus double returns. Other liquid staking and re-staking providers are also eager to join this field. Sunand Raghupathi, co-founder of Veda Protocol and Seven Seas Capital, said that two days after Symbiotic announced its launch, through Veda, they were able to launch an LRT on Symbiotic.
Veda has partnered with EtherFi to launch the "Super Symbiotic" vault, which accepts a variety of Ethereum derivatives, including EtherFi's eETH, and converts it into stETH for Symbiotic to use. Technically, Symbiotic could accept eETH itself, which would be double-collateralized - first on EigenLayer, then on Symbiotic - but this is not what EtherFi does. If a user provides eETH, it is first removed from EigenLayer. Misha Putiatin, co-founder of Symbiotic, pointed out that double collateralization is inherently risky. We can't stop people from double staking, but we have no plans to incentivize this behavior.
MEV Capital’s Bourquin believes double collateralization is inevitable. Currently, this risk is on hold because there is no slashing mechanism on EigenLayer. Deposits accepted by EigenLayer can be delegated to Active Validation Services (AVS), but none of them currently have slashing conditions enabled, which will ultimately put depositors’ funds at greater risk. Bourquin believes Symbiotic’s flexibility is a clear advantage.
EtherFi started out as an EigenLayer re-staking protocol, but has since become a trusted brand in other areas, such as launching Liquid, a stablecoin vault managed by Seven Seas that earns high yields through multiple DeFi channels such as liquidity provision, lending optimization, and price arbitrage. By allowing its users to participate in Symbiotic, EtherFi can retain these users within its ecosystem and capture part of the capital flow. This approach provides an alternative to converting eETH through on-chain liquidity pools, which could put pressure on the stability of derivatives.
Even if the amount of eETH decreases as a result, EtherFi can still retain these users through its brand and front-end. EigenLayer believes that most assets should not be used for this purpose, and it took them a long time to figure out that ETH is in a sense the king of safe assets. Symbiotic believes that market forces should determine what is suitable collateral for AVS staking. EigenLayer does have plans to support dual staking, using ETH and a custom crypto asset, but Symbiotic's permissionless design can achieve this today.
Anyone can create a market on Symbiotic, so the variety of tokens used to secure AVS on Symbiotic will be much greater than on EigenLayer, which is heavily focused on ETH.
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