Authored by Yangz, Techub News
In the midst of this rare DeFi hot narrative in the current bull market, the re-staking track welcomes 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. Just 5 hours after its launch, the wstETH staked on Symbiotic reached its limit, demonstrating strong momentum.
Considering that the current re-staking track EigenLayer only supports ETH and certain ETH derivatives for staking, while Symbiotic supports staking of any asset adhering to the ERC-20 token standard, the two may become direct competitors. According to a previous report by CoinDesk, the funding behind this round is actually a game between giant VCs. Several sources revealed that EigenLayer co-founder Sreeram Kannan had rejected investment from Paradigm and chose a16z instead. Cyber Fund, on the other hand, was created by Lido co-founders Konstantin Lomashuk and Vasiliy Shapovalov. Although Cyber Fund has expressed respect for the pioneering work done by EigenLayer in re-staking, it is not difficult to imagine that this investment is also a measure to counter EigenLayer’s encroachment on its market share.
So, what exactly is Symbiotic, a re-staking protocol?
Introduction to Symbiotic
According to the official documentation, Symbiotic is a shared security protocol that acts as a coordinating layer allowing network builders to control and adjust their (re)staking strategies in a permissionless manner.
The advantages of this protocol include:
Flexibility brought by modularity
The network can control all aspects of (re)staking strategies, including supported staking assets, selection of node operators, rewards, penalties, and related settlement mechanisms. All participants can flexibly choose to join or exit Symbiotic.
Risk minimization through invariability
The non-upgradable core contracts on Ethereum eliminate external governance risks and single points of failure. The contract design of Symbiotic maximally reduces execution layer risks.
Capital efficiency through re-staking and reputation-based curation
The design that is permissionless, multi-asset, and network agnostic helps achieve scalable and highly capital-efficient economic security. Additionally, the evolving operator-centric cross-network reputation system will further enhance the capital efficiency of network builders.
Core Modules of Symbiotic
The Symbiotic protocol consists of 5 interrelated modules, including collateral for the economic security layer, treasury for staking, operators for the infrastructure layer, resolvers for arbitration, and networks for the service layer.
Collateral
Collateral can enhance capital efficiency and scale by holding assets outside the Symbiotic protocol itself (e.g., holding DeFi positions on networks other than Ethereum) to protect the security of the Symbiotic network. This goal is achieved by separating the ability to penalize assets from the underlying assets themselves, similar to how liquidity staking tokens create representations of underlying staked positions. Technically, the collateral positions in Symbiotic are ERC-20 tokens with extended functionality for handling penalties.
Staking tokens are minted and deposited into the treasury by users who own assets or want to stake positions, and the treasury delegates the collateral to operators in the Symbiotic network. The treasury defines acceptable collateral, and the network needs to accept the treasury’s collateral and terms (such as penalty limits) to receive rewards.
Treasury
The treasury serves as the delegation and re-staking management layer of Symbiotic, with functions including:
Accounting: The treasury handles deposits, withdrawals, penalties, and assets related to collateral.
Delegation strategies: The treasury deployers/owners formulate delegation and re-staking strategies for operators on the Symbiotic network.
Reward distribution: The treasury distributes staking rewards to collateral holders in the network.
The treasury can be deployed in an immutable, pre-configured manner and specify owners who can update treasury parameters. Cryptocurrency institutions, liquidity (re)staking protocol operators, and custodians are expected to use the treasury to create differentiated products, such as:
Operator-specific treasuries: Operators can create treasuries and re-stake collateral to their infrastructure through any network configuration. Operators can create multiple treasuries with different configurations to provide services to clients without the need for additional node infrastructure.
Multi-operator treasuries: Configuring re-staking networks and delegation strategies for different operators. The treasury can also set custom penalty limits, setting limits on the amount of collateral that specific operators or networks can be penalized. These commitment terms require approval from the network providing curation services.
Immutable pre-configured treasury: The treasury can be deployed with pre-configured rules that cannot be updated, thereby preventing treasury managers from adding additional re-staking networks or changing configurations in any other way.
Operator
Operators are entities that operate decentralized network infrastructure both within and outside the Symbiotic ecosystem. The Symbiotic protocol creates an operator registry that records interactions with the protocol, and participants can attach credentials and other data to operator entities. In the initial version, this includes metadata provided by operators themselves, as well as data created through interactions with the Symbiotic protocol, such as:
Networks that operators choose to join
Related treasuries and collateral in the treasury
Historical penalty logs and all other interaction records with the Symbiotic ecosystem
An important advantage of the Symbiotic protocol and its treasury system is that operators can receive staking shares of the same set of node infrastructure for each supported network from different partners (through the treasury). This system allows node operators to obtain shares from different stakers with different risk profiles without having to build separate infrastructure for each of them.
Resolver
Symbiotic introduces resolvers to support various modes of handling penalty events. Resolvers are contracts or entities that can veto penalty events forwarded from the network, determined by terms proposed by the network and accepted by the treasury supporting operators with collateral. The treasury can allow multiple different (or none) resolvers to cover all its collateral. Additionally, decentralized dispute resolution frameworks such as UMA, Kleros, reality.eth can also act as resolvers. Furthermore, additional security measures are provided for participants of the Symbiotic protocol through veto mechanisms requiring a certain number of votes or through specific penalty events.
Network
In Symbiotic, a network is defined as any protocol that requires decentralized infrastructure networks to provide services in the crypto economy, such as validating and ordering transactions, providing off-chain data to applications in the crypto economy, or providing guarantees for cross-network interactions for users to launch decentralized applications.
Decentralized infrastructure networks can utilize Symbiotic to acquire their security in the form of operators and economic support. In some cases, a protocol may consist of multiple sub-networks with different infrastructure roles. The modular design of the Symbiotic protocol allows developers of such protocols to define participation rules for joining any sub-network.
Progress of the Symbiotic Ecosystem
According to sources cited by CoinDesk, Renzo has been in discussions for integration post the launch of Symbiotic. Additionally, Ether.Fi co-founder Mike Silgadze is also excited about Symbiotic, stating, “I’m excited about what they are researching. It looks interesting and innovative.”
Currently, the Symbiotic ecosystem has nearly 20 partners, with the following developments:
Ethena is integrating Symbiotic with LayerZero’s decentralized verification network (DVN) framework to achieve cross-chain for Ethena assets (such as USDe).
Bolt, built by Chainbound, is a protocol that enables Ethereum block proposers to make trustworthy commitments (such as trustless pre-commitments) and plans to use Symbiotic for re-staking and penalties for operator sets.
Hyperlane is exploring an inter-chain security module (ISM) driven by Symbiotic for its modular interoperability framework.
Kalypso is a ZK proof market supporting private inputs, using Symbiotic re-staking to provide validity and response time guarantees for proof generation.
Fairblock is working with Symbiotic to explore the dynamic encrypted service network (CSN), which uses (re)staking assets to ensure security and customization for applications requiring different security parameters, performance, and availability.
Aori plans to combine Symbiotic re-staking with stablecoin assets, allowing market makers and resolvers to take responsibility when interacting with their high-frequency order protocols.
Drosera is collaborating with the Symbiotic team to research re-staking applications for Ethereum Layer2 solutions.
Ojo is a cross-chain oracle network that will enhance its economic security through Symbiotic.
Blockless enables builders to create secure, network-neutral applications with complete autonomy and flexibility in shared security by integrating Symbiotic’s customizable security with its customizable computing infrastructure.
Rollkit is exploring the integration of Symbiotic re-staking into its modular stack to facilitate the launch of Sovereign Rollup on Celestia; initially, Symbiotic will help provide accountability for the Rollup sequencer, with the integrated long-term goal being the decentralization of the sequencer.
Cycle Network aims to achieve blockchain network agnosticism in a unified liquidity network and will use Symbiotic to power its shared sequencer.
Stork aims to integrate Symbiotic re-staking to enhance trustless utilization of on-chain data.
Aizel is building a verifiable artificial intelligence network, researching how to use Symbiotic to restructure different node roles to ensure verifiability from reasoning to execution.
Mind Network will combine Symbiotic re-staking with FHE to enhance economic and consensus security in decentralized networks.
DOPP is building a fully on-chain options protocol that is researching Symbiotic re-staking to help its oracle network achieve decentralization for price feedback on specific options.
As Cyber Fund pointed out, composability efficiency has always been a core value proposition of DeFi protocols. EigenLayer brought efficient capital redeployment for protocols in need of security outside Ethereum, despite being criticized in the early stages, it cannot be denied for its role in inspiring innovation. Now, Symbiotic enters the re-staking track with strong capital, and the competition between the two is inevitable. Whether Symbiotic will become the “default choice for launching decentralized networks” as Paradigm hopes remains to be seen, but its competition with EigenLayer will undoubtedly inject new vitality into the currently sluggish DeFi track.
