Quicktake

• EigenLayer’s Dominance: EigenLayer has amassed significant capital, becoming a leading DeFi protocol by attracting over 5.4 million ETH.
• Symbiotic’s Entry: Symbiotic’s innovative “stake anything” design introduces a flexible restaking model supporting any ERC-20 asset.
• Ethena’s Role: Ethena’s native token ENA and its synthetic dollar, sUSDe, become the first non-ETH-based assets restaked on Symbiotic.
• Mellow Finance Integration: Mellow Finance’s infrastructure supports Symbiotic’s restaking, quickly filling vault caps.

Ethena’s Symbiotic Edge: Challenging EigenLayer in the Restaking Arena

The restaking landscape in decentralized finance (DeFi) is witnessing a transformative shift as Symbiotic enters the arena with its innovative “stake anything” design. This development comes as EigenLayer, a pioneer in restaking, has already made significant strides, attracting a colossal amount of ether (ETH) and solidifying its position as one of the largest DeFi protocols.

EigenLayer’s Ascendancy

Since its launch on the Ethereum mainnet a little over a year ago, EigenLayer has demonstrated a remarkable ability to attract capital. By early June, it had amassed approximately 5.4 million ETH, valued at $20 billion at its peak. This impressive feat was achieved through strategic moves, such as raising deposit caps aggressively and accepting various forms of ether, which significantly boosted deposits from under 1 million ETH to around 3 million by March 2024. Even the introduction of Karak, an alternative multi-asset restaking model, did not slow EigenLayer’s growth.

Symbiotic’s Disruptive Approach

Symbiotic is poised to disrupt the restaking market with its flexible and inclusive approach. Unlike EigenLayer, which primarily focuses on ETH, Symbiotic allows any ERC-20 asset to be used as collateral for restaking. This level of customization provides developers with a broader range of assets to secure their applications, thus enhancing the utility and attractiveness of the protocol.

Ethena’s Strategic Move

Ethena, a notable player in the crypto space, has leveraged Symbiotic’s platform to extend its reach. Ethena’s native token ENA and its synthetic dollar, sUSDe, which generates yield through ether staking and the futures basis trade, have become the first non-ETH-based assets to be restaked on Symbiotic. The launch of the new sUSDe vault on Mellow Finance, which supports Symbiotic’s infrastructure, saw a rapid influx of deposits, quickly reaching its $40 million cap. Similarly, the ENA vault witnessed significant engagement, filling up halfway within the first day.

Mellow Finance and Lido Alliance

Both Mellow Finance and Symbiotic enjoy the backing of Cyber Fund and are integral parts of the Lido Alliance. Currently, other Mellow Finance vaults only accept Lido staked ether (stETH), underscoring the collaborative synergy within the ecosystem.

Future of Liquid Restaking Tokens

The acceptance of liquid restaking tokens (LRTs) within Symbiotic vaults is another significant development. Laurent Bourquin, a general partner at MEV Capital, anticipates that Symbiotic will soon accept LRTs from EigenLayer, offering a dual yield opportunity through double slashing. This could potentially attract more liquidity providers seeking higher returns, thereby increasing Symbiotic’s competitive edge.

Broadening Market Participation

Sunand Raghupathi, co-founder of both Veda Protocol and Seven Seas Capital, has expressed optimism about the broader market’s eagerness to participate in Symbiotic’s ecosystem. Just two days after Symbiotic’s launch, Veda was able to introduce an LRT on the platform, demonstrating the speed and efficiency with which new integrations can occur. Veda’s collaboration with EtherFi on the “Super Symbiotic” vault, which accepts various ether derivatives and converts them to stETH for Symbiotic use, highlights the innovative approaches being adopted to leverage the protocol’s capabilities.

Risk and Regulation

Despite the promising potential, double restaking poses inherent risks. Symbiotic’s co-founder, Misha Putiatin, has acknowledged this, stating that while they cannot prevent networks from accepting double restaked assets, they have no plans to incentivize such behavior. This cautious approach is intended to mitigate potential risks associated with over-leveraging assets within the ecosystem.

Conclusion

As Symbiotic continues to gain traction with its flexible restaking model, it is set to challenge EigenLayer’s dominance in the DeFi space. Ethena’s strategic move to leverage Symbiotic’s platform further underscores the protocol’s potential to redefine the restaking landscape. With the support of Mellow Finance and the Lido Alliance, and the anticipated integration of liquid restaking tokens, Symbiotic is well-positioned to attract a diverse range of assets and participants. The ongoing developments in this space will undoubtedly shape the future of decentralized finance, offering new opportunities and challenges for all stakeholders involved.