Can Symbiotic break EigenLayer's monopoly?

Author: LINDABELL Source: ChainFeeds

Yesterday, the re-staking project Symbiotic announced its official launch and completed a $5.8 million seed round led by Paradigm and Cyber ​​Fund. According to the introduction, Symbiotic is a permissionless shared security protocol. Shared security means that multiple networks can share the services and security guarantees of the same set of node operators, thereby improving capital efficiency and security. This concept has been applied in EigenLayer re-staking.

Although it belongs to the same re-staking track as EigenLayer, unlike EiegnLayer, Symbiotic allows users to stake a wider range of tokens, including ERC20 tokens, Ethereum validator withdrawal vouchers, or liquidity provision proofs. In addition, Symbiotic provides more flexible component customization options. While the core protocol is partially defined by an immutable core contract, other components (such as pledged assets, reward mechanisms, and penalty standards) can be configured by the network or other agents as needed.

According to CoinDesk, Lido co-founders Konstantin Lomashuk and Vasiliy Shapovalov and Paradigm secretly funded a new project similar to EigenLayer as early as May this year, which is Symbiotic. Interestingly, the report also mentioned that according to several people familiar with the matter, Paradigm had expressed its willingness to invest in EigenLayer co-founder Sreeram Kannan, but was rejected. EigenLayer then chose to raise $100 million from a16z. In response, Paradigm said it would invest in EigenLayer's competitor projects.

Symbiotic Architecture Analysis: Simple Lightweight Coordination Layer

Symbiotic is designed as an extremely flexible, permissionless and reliable thin coordination layer (thin coordination layer) to simplify the system architecture and reduce operating costs, while ensuring that the network can efficiently process transactions and execute protocols. According to the Symbiotic document, the Symbiotic network architecture consists of five core components that work together to maintain and improve the security and efficiency of the decentralized network.

1) Collateral

Role: Ensure economic security in Symbiotic

Function: In the Symbiotic system, the tokens that users can stake are a broader concept, covering a variety of on-chain assets, such as ERC20 tokens, Ethereum validator withdrawal vouchers, or liquidity provision certificates. Users can stake these assets and convert them into specific staked tokens, which have extended functions and can be used for penalties or compensation when necessary.

2) Valuts

Role: Coordinate and manage the staking and re-staking process

Function: The bridge in the Symbiotic protocol used to connect the staking asset holders and the Operators who operate the network infrastructure. The staking tokens converted by the user's staking will be stored in Vaults, which are responsible for delegating these tokens to the operators in the network to support the operation of the network. In addition, because Vaults are configurable, they can be deployed in a variety of ways to meet different needs and security considerations. For example, completely immutable pre-configured Vaults can provide services for applications that require high stability and security, while Curated Multi-Operator Vaults can centrally manage the funds and strategies of multiple operators and provide customized services.

3) Operators

Role: Infrastructure providers within the Symbiotic ecosystem

Function:By obtaining staked tokens from Vaults, Operators can ensure the necessary financial support for network security and operations. Symbiotic has created a registry to record and track the performance of Operators. It is worth noting that Operators can obtain financial support from multiple partners through Vaults without having to build or maintain independent infrastructure for each partner separately. In the future, Symbiotic also plans to introduce more verification and evaluation systems to enable the Network to select Operators based on their reputation and historical performance.

4) Resolvers

Role: Acts as an arbitrator in the ecosystem, responsible for adjudicating and handling economic penalties caused by malicious behavior in the network, which can be either an entity or a contract

Function: There are two specific implementation methods. One is a fully automated method, which is suitable for those malicious behaviors that can be clearly proved. The second is to take a more complex form, such as setting up a committee or introducing an external dispute resolution framework. Vaults and Network can jointly choose the appropriate type of Resolvers. Vaults also have the right to formulate specific terms for how to deal with Resolvers of staked tokens. In addition, Resolvers can be shared across networks, allowing multiple networks to use the same Resolvers mechanism to handle potential disputes.

5）Network

Role: Various protocols or platforms that rely on decentralized infrastructure to provide services

Function: Symbiotic allows these Networks to obtain the required security in a flexible way, including technical services and financial support from operators. These Netwroks can customize the strategies for recruiting and managing node operators and independently select cooperative Vaults through Symbiotic's modular design. In addition, the core contracts provided by Symbiotic are open source and cannot be changed, ensuring the security and stability of network operation without worrying about external governance risks.

Overall, in the Symbiotic protocol, users will first convert their pledged assets into Collateral and deposit them into Vaults, and Vaults will entrust these tokens to Operators according to the set strategies to provide the necessary economic resources for the operation of the network. Operators perform network tasks such as data processing and transaction verification according to these strategies. At the same time, Resolvers play a key arbitration role in the system and are responsible for handling any economic penalties that may be caused by Operators' behavior. As the ultimate service provider, the Network is responsible for defining and adjusting the rules of interaction with Vaults and Operators, including how to accept pledges, how to distribute rewards, and how to deal with penalties.

Symbiotic Ecosystem

The Symbiotic system is highly flexible and can support projects at different stages of the decentralization process. For example, a project can work with existing operators at the beginning to build a trust-minimized and decentralized network. It can also achieve ecosystem alignment by expanding the cluster of operators in its existing ecosystem and increasing the cost of attack.

Currently, Symbiotic has established partnerships with 16 projects, including USDe developer Ethena, cross-chain application building platform Hyperlane, oracle network Ojo, Aizel, which is building a verifiable artificial intelligence network, and full-chain ledger protocol Cycle Network. Among them, Ethena is integrating Symbiotic with LayerZero's decentralized verification network (DVN) framework to achieve cross-chain security of Ethena assets; the full-chain ledger protocol Cycle Network plans to use Symbiotic to power its shared sequencer; Celestia's modular Rollup framework product Rollkit is exploring the integration of Symbiotic re-staking into its modular stack to facilitate the launch of sovereign Rollup on Celestia.

Summary

DefiLlama data shows that EigenLayer's locked-in amount has exceeded 18 billion US dollars, making it the largest locked-in project after Lido, and ranking first in the heavy pledge track. The remaining projects have locked-in amounts of less than 1 billion US dollars. These data show EigenLayer's leading position in the entire heavy pledge track. But the launch of Symbiotic may bring new competition, especially its support for heavy staking using Lido's stETH and other assets that were originally incompatible with EigenLayer, which may provide it with an advantage in competing with EigenLayer on TVL. According to Symbiotic's Twitter, the project reached the staking limit of 41,290 wstETH in 5 hours.

In addition, as a new project supported by Paradigm, Symbiotic has shown a wider range of applicability in technical support and use cases. Paradigm wrote that "in the short term, Symbiotic is mainly used 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 Symbiotic-based shared security services.

However, EigenLayer has established a solid market position and ecological foundation in the field of heavy staking. Whether Symbiotic can break the "monopoly" of EigenLaeyr with its advantages remains to be seen.