Written by Yangz, Techub News
As one of the few popular DeFi narratives in this round of bull market, the re-staking track has welcomed another heavyweight player. On June 11, Symbiotic announced the completion of its initial deployment and raised $5.8 million in a seed round led by Paradigm and Cyber Fund. Five hours after going online, the wstETH staked on Symbiotic reached the upper limit, and the momentum was really fierce.
Considering that EigenLayer only supports ETH and certain ETH derivatives for staking in the current re-staking track, while Symbiotic supports any assets of the ERC-20 token standard for staking, the two may become direct competitors. According to CoinDesk's previous report, the financing behind this round is actually a game between giant VCs. Several people familiar with the matter revealed that EigenLayer co-founder Sreeram Kannan had rejected Paradigm's investment and chose a16z instead. Cyber Fund was created by Lido co-founders Konstantin Lomashuk and Vasiliy Shapovalov. Although Cyber Fund issued a statement to express respect for EigenLayer's pioneering work in re-staking, it is not difficult to imagine that this investment should also be its measure to deal with EigenLayer's erosion of its market share.
So, what kind of re-pledge agreement is Symbiotic?
According to the official documentation, Symbiotic is a shared security protocol that serves as a coordination layer that enables network builders to control and adjust their (re)staking strategies in a permissionless manner.
Advantages of this agreement include:
Modularity brings flexibility
The network controls all aspects of the (re)staking strategy, including supported staking assets, selection of node operators, rewards, penalties, and related settlement mechanisms. All participants have the flexibility to choose to join or exit Symbiotic.
Minimizing Risk Through Immutability
The non-upgradeable core contracts on Ethereum eliminate external governance risks and single points of failure. Symbiotic’s contract design minimizes execution layer risks.
Improving capital efficiency through re-staking and reputation-based curation
The permissionless, multi-asset, and network-agnostic design helps achieve scalable and capital-efficient economic security. In addition, the evolving operator-centric cross-network reputation system will further improve capital efficiency for network builders.
The Symbiotic protocol consists of five interrelated modules, including collateral at the economic security layer, a treasury at the staking layer, operators at the infrastructure layer, resolvers at the arbitration layer, and a network at the service layer.
Collateralization improves capital efficiency and scale by enabling assets used to secure the Symbiotic network to be held outside of the Symbiotic protocol itself (e.g., holding DeFi positions on networks other than Ethereum). Symbiotic achieves this by decoupling the ability to slash assets from the underlying assets themselves, similar to how liquidity collateral tokens create tokenized representations of the underlying collateral positions. Technically, collateral positions in Symbiotic are ERC-20 tokens with extended functionality to handle slashing.
Collateral tokens are minted by users who own assets or want to re-collateralize positions and deposited into the Treasury, which delegates the collateral to operators in the Symbiotic network. The Treasury defines acceptable collateral, and the network needs to accept the Treasury collateral and Treasury terms (such as slashing limits) to receive rewards.
The Treasury is Symbiotic’s delegation and re-staking management layer, with the following functions:
“Accounting”: The Treasury handles deposits, withdrawals, and forfeitures of collateral and, in turn, its related assets.
Delegation Strategy: Treasury deployers/owners set delegation and re-staking strategies to operators on the Symbiotic network.
Reward Distribution: The Treasury distributes the network’s staking rewards to collateral depositors.
Treasury can be deployed in an immutable, pre-configured manner or with designated owners who can update treasury parameters. Operators and custodians such as institutional cryptocurrencies or liquidity (re)staking protocols are expected to use treasuries to create differentiated products such as:
Operator-specific treasuries: Operators can create treasuries and re-pledge collateral to their infrastructure across any network configuration. Operators can create multiple treasuries with different configurations to serve customers without the need for additional node infrastructure.
Multi-operator Treasury: Configure re-staking networks and delegation strategies for different operators. The Treasury can also set custom slashing limits to cap the amount of collateral that can be slashed by a specific operator or network. These commitment terms need to be agreed to by the network providing the curation service.
Immutable pre-configured treasury: Treasury can be deployed with pre-configured rules that cannot be updated, thus preventing the risk of treasury managers adding additional re-staking networks or changing the configuration in any other way.
Operators are entities that run decentralized network infrastructure within and outside the Symbiotic ecosystem. The Symbiotic protocol creates an operator registry that records interactions with the protocol, and protocol participants can attach credentials and other data to operator entities. In the initial version, this includes operator entity metadata provided by the operators themselves, as well as data created through interactions with the Symbiotic protocol, such as:
Networks that operators choose to join
Related treasuries and re-pledged collateral in the treasury
Historical slashing logs and all other interactions with the Symbiotic ecosystem
A key advantage of the Symbiotic protocol and its treasury system is that operators can receive staked shares from different partners (via the treasury) for the same set of node infrastructure for each supported network. This system allows node operators to take stakes from different stakers with different risk profiles without having to build separate infrastructure for them.
Symbiotic supports various models for handling slashing events by introducing resolvers. Resolvers are contracts or entities that can veto slashing events relayed from the network, determined by terms proposed by the network and accepted by the treasury seeking to provide collateral backing for the operator. A treasury can allow multiple different (or no) resolvers to cover its entire collateral. Additionally, decentralized dispute resolution frameworks such as UMA, Kleros, reality.eth, etc. can also serve as resolvers. Additionally, additional security can be provided to participants of the Symbiotic protocol through veto mechanisms requiring a quorum or through specific slashing events.
In Symbiotic, a network is defined as any protocol that requires a decentralized infrastructure network to provide services in the cryptoeconomy, for example, by taking responsibility for validating and ordering transactions, providing off-chain data to applications in the cryptoeconomy, or providing guarantees for users to interact across networks, enabling developers to launch decentralized applications. Decentralized infrastructure networks can leverage Symbiotic to flexibly source their security in the form of operator and economic support. In some cases, a protocol may consist of multiple subnetworks with different infrastructure roles. The modular design of the Symbiotic protocol allows developers of such protocols to define the rules of participation for participants to choose to join any subnetwork.
According to CoinDesk, citing sources, Renzo has been discussing the integration of Symbiotic after its launch. In addition, Ether.Fi co-founder Mike Silgadze is also looking forward to Symbiotic, saying, "I'm excited about what they are working on. It looks interesting and innovative."
Currently, the Symbiotic ecosystem has nearly 20 partners. The following is the relevant progress:
Ethena is integrating Symbiotic with LayerZero’s Decentralized Verification Network (DVN) framework to enable cross-chain transactions for Ethena assets such as USDe.
Bolt, built by Chainbound, is a protocol that enables Ethereum block proposers to make credible commitments (such as trustless pre-confirmations), and plans to leverage Symbiotic for re-staking and slashing of operator sets.
Hyperlane is exploring a Symbiotic-powered Interchain Security Module (ISM) for its modular interoperability framework.
Kalypso is a ZK proof marketplace that supports private inputs and uses Symbiotic restaking to provide validity and response time guarantees for proof generation.
Fairblock is working with Symbiotic to explore a dynamic Crypto Services Network (CSN) that is secured by (re)staking assets and is tailored for applications that require different security parameters, performance, and usability tradeoffs.
Aori plans to combine Symbiotic recollateralization with stablecoin assets to hold market makers and solvers accountable when interacting with its high-frequency order book protocol.
Drosera is working with the Symbiotic team to research the security of re-staking applications for Ethereum Layer2 solutions.
Ojo is a cross-chain oracle network that will improve its economic security through Symbiotic.
By integrating Symbiotic’s customizable security with its customizable compute infrastructure, Blockless enables builders to create secure, network-neutral applications with full autonomy and flexibility over shared security.
Rollkit is exploring integrating Symbiotic restaking into its modular stack to facilitate the launch of sovereign Rollups on Celestia; Symbiotic will initially help provide accountability for Rollup sequencers, with the long-term goal of the integration being decentralization of sequencers.
Cycle Network, a unified liquidity network that aims to make blockchains blockchain-agnostic, will use Symbiotic to power its shared sequencer.
Stork hopes to integrate Symbiotic restaking to enhance the trustlessness of on-chain data utilization.
Aizel is building a verifiable AI network and studying how to use Symbiotic to reconstruct different node roles to ensure verifiability from reasoning to execution.
Mind Network will leverage Symbiotic restaking in conjunction with FHE to enhance economic and consensus security in decentralized networks.
DOPP, which is building a fully on-chain options protocol, is looking into Symbiotic restaking to help decentralize its oracle network for price feeds on specific options.
As Cyber Fund points out, composable capital efficiency has always been the core value proposition of DeFi protocols. EigenLayer has brought efficient capital redeployment to protocols that require security outside of Ethereum. Although it was criticized in the early stages, it has made an indelible contribution to stimulating innovation. Now that Symbiotic has entered the re-staking track with strong capital, the game between the two sides is inevitable. As for whether Symbiotic will "become the default choice for launching decentralized networks" as Paradigm expects, the answer is still unknown, but its competition with EigenLayer will undoubtedly inject new vitality into the current sluggish DeFi track.
