Symbiotic Explained

What is Symbiotic?

Symbiotic is a new crypto restaking platform that allows projects to secure their decentralized protocols using a shared security model that distributes risk across multiple networks. Users can restake any ERC-20 token for yield rewards, offering more flexibility than EigenLayer, which only supports ETH liquid staking derivatives.

What makes Symbiotic unique is the modular approach which separates staking funds from validator infrastructure. That allows networks to use shared pools of staked assets and lets users choose operators that align with their risk tolerance and staking goals, improving both security and efficiency.

Additionally, Symbiotic relies on immutable core contracts to minimize risks. These non-upgradable contracts eliminate governance vulnerabilities and prevent single points of failure, providing a concrete foundation for decentralized networks.

Symbiotic currently has $2.25 billion in TVL, placing it head-to-head with Babylon for the second place in the restaking sector. Most recently the project announced the launch of its development network on the Ethereum Holesky testnet.

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How Does Symbiotic Restaking Work?

Symbiotic coordinates restaking through core components that bring flexibility and reliability to decentralized networks. Below are the main elements of how the protocol operates:

• Multi-Asset Collateral: Accepts ERC-20 tokens like wstETH, WBTC, ENA, FXS, and SWELL. These tokens can be held outside the protocol while still contributing to security.
• Vaults: Staking pools that delegate collateral. Examples include operator-specific vaults, curated multi-operator vaults for diverse restaking, and immutable pre-configured vaults.
• Operators: Registered entities running infrastructure for networks within and outside of Symbiotic. Operators have metadata, credentials, and logs of their interactions with the protocol.
• Resolvers: Contracts or entities that review and veto slashing incidents. If no action is taken by the veto deadline, the slashing request is approved.
• Networks: Decentralized networks that use Symbiotic for security and slashing management. Examples can include rollups and DeFi protocols like Frax Finance, Ethena, and Swell.
• Customizable Components: Projects can configure collateral assets, rewards, node operators, and slashing criteria, offering flexibility and control.

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How to Earn Points for the Symbiotic Airdrop?

To earn points for the Symbiotic airdrop, follow these steps involving restaking assets on the Symbiotic app and partner platforms. Here's a concise guide to get started:

1. Connect Wallet: Visit Symbiotic and connect your crypto wallet, like MetaMask.
2. Restake Assets: Go to the restaking section on the Symbiotic app or select "Restake" from the top menu. Choose a pool, input your amount, and deposit. Confirm the transaction in your wallet.
3. Check Dashboard: Visit the dashboard to monitor deposits, points, and collateral.
4. Delegate: The platform will soon add a "delegate" page where users can assign their stake to several types of delegators to optimize distribution and manage network limits.
5. Alternative Platforms: If Symbiotic pools are full, deposit liquidity on partner platforms like Pendle or Ether.fi. Right now, Pendle has weETHs and amphrLRT with a small multiplier.

It's important to note that as of late 2024, there is still no official confirmation yet about these points being used for a future token airdrop, but participating is the main way to gain a possible allocation.

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What are the Risks of Symbiotic Restaking?

Restaking in Symbiotic carries certain risks, especially related to slashing. Slashing penalizes operators for misbehavior or failing to meet network standards, which can result in the loss of staked collateral. Because Symbiotic enables cross-network operations, a failure in one network could lead to slashing across multiple networks, increasing risk for restakers.

The shared security model also presents challenges. Symbiotic depends on resolvers to veto unjust slashing, but if they fail or are compromised, restakers may face penalties without fair recourse. Additionally, managing multiple collateral types and operators introduces technical and operational risks that can affect the stability of restaked assets.

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Founding Team

The Symbiotic founding team is led by Misha Putiatin and Algys Ievlev, experts in blockchain and crypto auditing. They co-founded Symbiotic after successful tenures at MixBytes and Statemind, focusing on smart contract security. Felix Lutsch, formerly of Chorus One, joined them with his background in liquid staking. Based in Dubai, the team aims to lead in decentralized security and restaking.

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Funding

In June 2024, Symbiotic announced it had raised $5.8 million in a seed round led by Paradigm and Cyber Fund. Interestingly, before the funding was made public, the co-founders of Lido, the largest liquid staking protocol on Ethereum, were secretly involved in supporting Symbiotic.

Documents revealed by CoinDesk in May showed how Symbiotic would function, allowing users to restake assets like Lido's stETH and other popular tokens. This backing set up the rivalry with EigenLayer, the protocol that gave birth to the restaking narrative.

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Symbiotic vs. EigenLayer

The restaking wars have begun, with Paradigm-backed Symbiotic challenging a16z-backed EigenLayer for dominance in the restaking market. It's a battle between VCs to grab the largest slice of this niched crypto sector.

At Datawallet, we’ve analyzed key features to determine which protocol leads:

• Adoption: EigenLayer has the first mover advantage, capturing 67.58% of the $21.9 billion restaking market, but it is losing market share to the newcomer Symbiotic at 10.5%, alongside other fresh competitors like Babylon and Karak.
• Restaking Approach: EigenLayer requires stakers to delegate their entire stake to one operator, while Symbiotic allows stakers to distribute their risk across multiple operators.
• Withdrawals: EigenLayer locks shares for 7 days, limiting liquidity, whereas Symbiotic allows partial withdrawals, providing more flexibility.
• Slashing: EigenLayer plans a veto-based slashing committee, similar to Symbiotic that uses customizable slashing with resolvers to reduce cross-network risks.
• Asset Support: EigenLayer supports ETH, PEPE, DAI, and 10 liquid staking derivatives (LSDs). Symbiotic, in contrast, supports a broader range of assets, including various ERC-20 tokens and LP tokens (18 in total for now), providing more options.
• Token: EigenLayer's governance token, EIGEN, has a market cap of $640 million, placing it outside the top 100 cryptocurrencies. Symbiotic is still in the process of launching a token.

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Bottom Line

Symbiotic is standing tall with its modular restaking framework, support for diverse digital assets, and a solid reputation system for operator selection, giving a fierce challenge to EigenLayer. Symbiotic will probably have its big moment in 2025 with a token launch and airdrop, making the competition even more interesting.

What we love most about the project is the passion of its founder, especially Misha Putiatin. He shared that their mission is to create a setup where networks can launch in a truly decentralized way right from the start, avoiding the common problems of weak or overly centralized validators.