Secret Funding and New Competition
Founders of Lido and Paradigm: The co-founders of Lido, the largest liquid staking protocol on Ethereum, are secretly funding Symbiotic, an EigenLayer competitor. They support the project through their venture capital firm Cyber Fund and Paradigm, a cryptocurrency venture capital firm.
Symbiotic Project: The Symbiotic Project allows users to "reset" assets using Lido's ether (stETH) token and other ERC-20 assets. Symbiotic is developed by the team behind the Stakemind staking service and will operate as a permissionless "reset" protocol, providing a flexible mechanism for decentralized networks to coordinate node operators and economic security provider.
Current Situation and Impact
Lido and EigenLayer: Lido has been a phenomenon in DeFi, allowing users to stake crypto on Ethereum and receive “stETH” tokens for trading. However, recently, Lido is losing market share as users switch to EigenLayer, a new service that allows ETH tokens to be reset to secure other networks.
Market Share and Assets: EigenLayer has attracted approximately $16 billion in deposits since opening to investors last year, while Lido remains the largest DeFi protocol on Ethereum with $27 billion in deposits.
The Future and Competition
Symbiotic and ERC-20: Symbiotic will allow users to directly deposit any asset based on the ERC-20 standard, not just limited to ETH tokens, making it compatible with more assets than EigenLayer .
Reset Market: The emergence of Symbiotic and other competitors such as Karak, with support from major exchanges such as Coinbase, creates a strongly competitive market in the reset space.
Assessment and Expectations
Role of Lido DAO: Lido DAO is proposing the “Lido Alliance” to develop the ecosystem around stETH, helping to decentralize the network. Symbiotic, while not directly linked to Lido, could still fit into this strategy.
Launch Expectations: Symbiotic is expected to launch later this year, posing a significant challenge to EigenLayer in the asset reset space.
Conclude
The fact that the founders of Lido and Paradigm secretly funded Symbiotic shows a strong strategy to compete in the DeFi space. The emergence of Symbiotic could change the landscape, creating fierce competition with EigenLayer and affecting the strategies of current major DeFi protocols. Investors and users need to closely monitor further developments to adjust strategies and exploit new opportunities in the DeFi market.