Symbiotic, a new protocol that competes with EigenLayer in the re-hypothecation market, has acquired more than $1 billion in lock-up value in less than a month. Symbiotic has also launched some new ideas based on re-hypothecation.

(Pledge a new front! Lido co-founder and Paradigm secretly back EigenLayer rival Symbiotic)

Unleashing the true potential of governance tokens

Governance tokens have become a cornerstone of the blockchain ecosystem, enabling holders to actively participate in the decision-making process. However, these tokens often face a dilemma: should they be used for governance or as financial assets? The Tally Protocol, combined with Symbiotic’s shared security framework, provides a solution to maximize the utility of these tokens without compromising their primary functionality.

Shared security increases token utility.@tallyxyz is partnering with Symbiotic to improve governance by separating voting power from financial utility. pic.twitter.com/2rlRUo1slP

— Symbiotic (@symbioticfi) July 3, 2024

Balancing governance and financial utility

Challenges of governance tokens

Governance tokens give holders the power to influence the protocol, but this requires locking the token, limiting its financial utility. Token holders must choose between participating in governance or serving as collateral in DeFi applications. This requires a system that maximizes token utility while retaining governance rights.

Tally protocol solution

The Tally Protocol solves this problem by decoupling governance voting rights from the financial utility of the token. This enables token holders to:

  • Maintain governance rights: Continue to participate in protocol decisions.

  • Use tokens as collateral: Secure infrastructure networks without losing governance.

  • Unlocking economic opportunities: Leveraging tokens in new areas of finance.

Symbiotic’s role in governance re-staking

Enhance flexibility and security

Symbiotic assists the Tally Protocol by providing a shared security framework that supports custom re-hypothecation implementations that enable various types of collateral, including DAO Protocol tokens, providing significant benefits to the protocol and token holders.

Main advantages

  • Customizable security system: Protocols can design tailor-made security measures.

  • Increased returns: Token holders can earn additional rewards by contributing to network security.

What are the real-life application cases of Symbiotic x Tally?

Case Study 1: Driving L2 Infrastructure

Layer 2 (L2) solutions require decentralized and secure infrastructure. The Tally Protocol and Symbiotic enable L2 to support its services with its own token, enhancing the security and decentralization of its network.

Example: Arbitrum Protocol

  • Staking: ARB token holders stake their tokens in the Tally protocol and receive tARB (Tally Liquid Staking Arbitrum Tokens).

  • Collateral: These tokens are used as collateral in Symbiotic to support network services such as data availability for the L3 chain.

  • Economic Benefits: ARB token holders receive rewards for staking and can re-stake their tokens in Symbiotic, receiving additional value from fees paid by the L3 chain.

Case Study 2: Decentralized Security for Interoperability Platforms

Interoperability protocols like Wormhole rely on validators and relayers for asset transfers. Tally Protocol and Symbiotic enhance this setup, especially Wormhole’s Native Token Transfer (NTT) framework.

Example: Wormhole protocol

  • Liquid pledge: Create tW (liquid pledge Wormhole token) through the Tally protocol.

  • Enhanced security: tW holders support decentralized guardians and relayers, working together with the guardian network.

  • Ecosystem Participation: Wormhole token holders secure their protocol and receive native W staking benefits as well as additional benefits for supporting services.

Reshaping the blockchain governance structure

Governance re-staking through the Tally Protocol and Symbiotic solves a key limitation of the DAO token’s utility, unlocking a new class of shared security use cases. By separating governance from financial utility, this approach:

  • Unlock new value: Token holders gain access to new financial opportunities.

  • Preserve governance structure: The DAO retains control of its protocol.

  • Promoting secure infrastructure development: Strengthening the blockchain ecosystem.

As the blockchain space evolves, this innovative solution could impact the future trajectory of decentralized finance and governance, providing a solid foundation for new applications and enhanced protocol security.

This article Governance Re-Pledge: Tally Protocol and Symbiotic will reshape the blockchain governance structure first appeared on Chain News ABMedia.