Restaking pioneer EigenLayer has demonstrated exceptional success in attracting capital — successfully appearing as a “black gap” for ether — and has develop into one of many largest DeFi protocols within the course of.
However Symbiotic’s entrance into the shared safety house with a “stake something” design is poised to shake issues up.
Since launching on Ethereum mainnet simply over a yr in the past, EigenLayer had sucked in about 5.4 million ETH, value $20 billion at its peak in early June. The protocol started elevating deposit caps aggressively in early 2024, and accepting extra flavors of ether.
By March, deposits had elevated from underneath 1 million ETH to roughly 3 million. This development fee continued even after the launch of Karak, an alternate multi-asset restaking mannequin designed to boost staking yields.
Learn extra: Karak desires to introduce ‘common restaking’ for everybody
Taking the idea additional, newcomer Symbiotic helps any ERC-20 asset as collateral for restaking. This degree of customization choices, and a versatile restaking mannequin, permits builders to make use of all kinds of belongings to safe their functions.
Ethena’s native token ENA, together with the staked model of its artificial greenback, sUSDe, which earns yield by means of ether staking and the futures foundation commerce, yesterday turned the primary non-ETH-based belongings to be restaked on Symbiotic.
The brand new sUSDe vault on Mellow Finance, which offers infrastructure to Symbiotic danger curators, quickly hit its $40 million cap, and the ENA vault is about half full after the primary day of deposits.
Each Mellow and Symbiotic have been supported by Cyber Fund and are a part of the Lido Alliance, and different Mellow vaults solely settle for Lido staked ether (stETH), for now.
The Ethena vaults have three curators: MEV Capital, Re7 Labs and K3. Laurent Bourquin, a normal accomplice at MEV Capital, says he expects liquid restaking tokens (LRTs) to be accepted as deposits in Symbiotic vaults as properly.
“The principle large distinction is the [agnosticism] of Symbiotic within the sense that you could additionally let EigenLayer LRTs to come back to Symbiotic,” Bourquin informed Blockworks, “so you should have double slashing, therefore a double yield tranche.”
Different liquid staking and restaking suppliers are keen to leap within the pool too, agrees Sunand Raghupathi, co-founder of each Veda Protocol and Seven Seas Capital, although not essentially as Bourquin sees it.
“Two days after Symbiotic introduced their launch — and, behind the scenes, they have been clearly working with Mellow to construct restaking infrastructure — by means of Veda we have been truly capable of launch a LRT on Symbiotic,” Raghupathi informed Blockworks.
Learn extra: Symbiotic goals to be the Uniswap of shared safety
Veda partnered with EtherFi on its “Tremendous Symbiotic” vault, which accepts quite a lot of ether derivatives — together with EtherFi’s eETH — and converts them to stETH to be used in Symbiotic.
Technically, Symbiotic may settle for eETH itself, which might successfully be double-restaked — first in EigenLayer after which in Symbiotic — however that’s not what EtherFi does. If a consumer provides eETH, it’s first faraway from EigenLayer.
As Misha Putiatin, co-founder of Symbiotic has famous, double restaking could be inherently dangerous.
“We will’t cease individuals from double restaking, if networks settle for that, we will’t do something about that,” Putiatin stated, including they don’t have any plans to incentivize such habits, nonetheless.
MEV Capital’s Bourquin thinks double restaking is inevitable.
“I feel now it’s initially FOMO — concern of lacking out — from the LRTs to nonetheless being there first,” Bourquin stated. “So let’s say the danger is put a bit apart for now for the easy motive that slashing doesn’t even exist but on EigenLayer — we’re speaking about danger that might be there on the finish of the summer season.”
Though EigenLayer accepts deposits which may be delegated to Actively Validated Companies (AVSes), none of those are but stay with slashing situations in place, which can finally put depositors’ capital at better danger.
Finally, Bourquin sees the flexibleness of Symbiotic as a transparent plus.
“We’re actually bullish on Symbiotic as a result of it avoids the hyper-centralization of LRTs into one or two or three names,” Bourquin stated.
EtherFi began as an EigenLayer restaking protocol however has branched out to develop into a trusted model in different areas — for example, launching Liquid, a stablecoin vault which is managed by Seven Seas and earns excessive yields by means of myriad DeFi avenues similar to liquidity provisioning, lending optimization and peg arbitrage.
By permitting its customers to take part in Symbiotic, EtherFi can retain them inside its ecosystem, capturing a portion of the capital flows. This strategy offers a substitute for swapping out of eETH through on-chain liquidity swimming pools, which may in any other case stress the spinoff’s stability.
Learn extra: What was behind the run on Renzo’s liquid restaked ETH?
Even when the quantity of eETH declines because of this, EtherFi retains these customers by means of its model and frontend, the argument goes.
“The EigenLayer view is that the majority belongings shouldn’t be used for this,” Raghupathi stated. “We’ve spent a very long time discovering that ETH is in some sense the king of safe belongings.”
Symbiotic’s view is market forces ought to decide what’s or isn’t appropriate collateral for AVS staking.
EigenLayer does have plans of supporting twin staking, utilizing ETH and a bespoke cryptoasset collectively, however Symbiotic’s permissionless design permits that right this moment, Raghupathi stated.
“Anybody can spin up markets on Symbiotic, and so that you’re going to see a a lot bigger variety of tokens which are getting used to safe AVSes on Symbiotic than you see in EigenLayer which could be very, very ETH targeted.”