As blockchain technology develops, re-staking has become a hot topic. The Symbiotic project, as an important innovator in the field of re-staking, is attracting widespread attention. On June 18, 2024, the project announced that it would work with Ethena Labs and LayerZero to pilot a universal re-staking framework to improve the security and operational efficiency of cross-chain assets. This move not only provides Ethena's assets such as USDe and sUSDe with a safer cross-chain transfer method, but also verifies the reliability of the transfer through the LayerZero DVN network. This innovative framework of Symbiotic will provide economic security for partners in the LayerZero ecosystem and enable the selection of DVN operators through consistent tokens. In addition, the Symbiotic project also completed a $5.8 million seed round of financing on June 11, 2024, led by Paradigm and Cyber Fund, injecting strong momentum into its future development.
Next, we will discuss in detail the specific operating model, market strategy and challenges faced by the Symbiotic project.
Symbiotic Platform Introduction: Flexible and Permissionless, Comparable to EigenLayer
Symbiotic is a new shared security system designed as an extremely flexible, permissionless and reliable lightweight coordination layer. The protocol allows network developers to fully control its (re)staking implementation and operator selection, while providing a wide range of security services. Symbiotic has emerged, as announced on June 11, having completed a $5.8 million seed round led by Paradigm and Cyber Fund. The news quickly attracted the attention of the market, reaching a staking cap of 41,290 wstETH in a short period of time, showing its huge market potential.
As a flexible, permissionless protocol, Symbiotic allows users to use Lido's stETH for re-staking with other assets that are not natively compatible with EigenLayer, making Symbiotic a direct competitor to EigenLayer. Symbiotic provides a general framework that allows network developers to control staked assets, reward and penalty criteria, and is initially used mainly to launch new consensus instances, such as the election of new L1 operators and decentralized sorting. In the long run, Symbiotic will also support use cases such as block production and multi-party computing. Paradigm has also developed Reth Execution Extensions (ExEx) to further enhance shared security services based on Symbiotic.
The core concept of Symbiotic is to provide a permissionless re-staking protocol that enables decentralized networks to effectively coordinate node operators and economic security providers. This mechanism is not only applicable to the current pledged ETH, but can also be extended to any ERC-20 asset, enabling it to serve multiple assets and related operator infrastructure groups in the future. This design makes Symbiotic highly flexible and adaptable to meet the needs of different networks and protocols.
Symbiotic eliminates external governance risks through its non-upgradeable core contract, which means that the protocol will not have central multi-signatures, penalty committees, or other permission mechanisms for shared security services. Such a design ensures the decentralization and high reliability of the system, allowing Symbiotic to occupy a place in the highly competitive re-staking market.
How Symbiotic works: Can its modular design achieve true decentralization compared to other re-staking platforms?
Symbiotic's operating mechanism is based on its unique flexibility, permissionlessness, and reliability, which make it stand out in the re-staking market. First, Symbiotic adopts a modular design that allows network developers to fully control all aspects of staking implementation. This design not only includes the selection of staking assets, but also covers the setting of reward and penalty criteria. In contrast, EigenLayer mainly supports ETH and its derivatives, which limits its flexibility to some extent.
In addition, Symbiotic's core contracts are non-upgradeable, which greatly reduces external governance risks. The non-upgradeable design is similar to Uniswap, ensuring that the system can continue to operate even if the team no longer maintains it. Relatively speaking, EigenLayer adopts a more centralized management approach, relying mainly on centrally managed node operators to verify various AVS (Active Verification Services), which simplifies operations but may increase the system's bundling risk.
Symbiotic’s permissionless design further enhances its flexibility and openness. Any decentralized application can integrate Symbiotic without approval, which is in stark contrast to Karak’s centralized governance model. Karak’s governance mechanism is relatively complex, involving multiple levels of approval and supervision, which to some extent limits its scalability and adaptability.
In terms of capital efficiency, Symbiotic's re-pledge mechanism greatly improves the efficiency of purchasing economic security by allowing a variety of ERC-20 tokens as collateral. This design not only helps to improve the capital utilization of pledgers, but also attracts more different types of assets to participate in re-pledge. In contrast, although Mellow also provides a modular LRT (liquidity re-pledge token) design, it mainly serves the ecosystem of the Lido Alliance, and its flexibility and adaptability are slightly inferior to Symbiotic.
Symbiotic's re-staking mechanism also includes a reputation-based operator selection system. The system ensures the decentralization and security of the network by evaluating factors such as the reputation of the operator, its geographical distribution, and its overlap with other protocols. This mechanism not only improves the security of staking, but also effectively disperses risks and prevents single points of failure. In contrast, EigenLayer's operator selection mechanism is more centralized and mainly relies on Ethereum's stakers, which limits its decentralization to some extent.
Finally, Symbiotic is designed with future scalability in mind. Through Reth Execution Extensions (ExEx), Symbiotic is able to quickly extract and process data and reach consensus with other peer networks. This scalability design allows Symbiotic to not only meet current re-staking needs, but also support emerging use cases in the future.
In general, Symbiotic has brought new vitality and competitiveness to the re-staking market through its flexible, permissionless and reliable design. Compared with EigenLayer, Karak and Mellow, Symbiotic has demonstrated its unique advantages and potential in multiple dimensions, and is expected to lead a new trend in re-staking in the future.
Understand Symbiotic's application prospects and partners, and explore potential investment opportunities
Symbiotic has a broad application prospect, and its design concept and market positioning enable it to play an important role in multiple fields. Through cooperation with Ethena Labs and LayerZero, Symbiotic has expanded its shared security services to the field of cross-chain asset transfer. Ethena Labs announced the update of ENA token economics and the launch of ENA universal staking function. Symbiotic played a key role in ensuring that Ethena-based assets (such as USDe and sUSDe) can be securely transferred across chains through LayerZero's decentralized validator network (DVN).
This cross-chain transfer is protected by staking ENA within Symbiotic, and provides economic security and operator selection for LayerZero ecosystem partners to launch re-staking DVN. The introduction of this modular framework enables Symbiotic to provide shared security services for multiple protocols, thereby playing a greater role in the decentralized network.
In addition, Symbiotic has also carried out in-depth cooperation with multiple partners. Bolt Protocol uses Symbiotic for operator settings for re-staking and slashing, Hyperlane is exploring the Symbiotic-driven cross-chain security module (ISM) for its modular interoperability framework, and Marlin's Kalypso uses Symbiotic re-staking to provide liveness and response time guarantees for proof generation. Fairblock is exploring a dynamic cryptographic service network (CSN), which is protected by (re)staking assets and customized for applications that require different security parameters, performance, and availability trade-offs.
The addition of these partners not only provides Symbiotic with a wealth of application scenarios, but also verifies its technical advantages and market prospects in the field of shared security. Symbiotic's modular design and permissionless features enable it to flexibly adapt to the needs of different networks and provide customized security services. This flexibility and scalability make Symbiotic of great strategic significance in the future construction of decentralized networks.
In summary, Symbiotic provides a new shared security mechanism for decentralized networks through its flexible, permissionless and reliable design. Its cooperation with Ethena Labs and LayerZero has demonstrated its application prospects in cross-chain asset transfers, and its in-depth cooperation with multiple partners has further verified its potential and value in the field of shared security. The emergence of Symbiotic has brought new vitality and competition to the re-staking market. How it will develop in the future is worthy of our continued attention.