Symbiotic: permissionless restaking for crypto

We are pleased to announce our investment in Symbiotic, a new protocol for shared security. Symbiotic helps networks build faster and more securely by providing permissionless restaking. Its immutable core contracts completely remove governance risk and censorship, while bespoke-by-network components enable faster deployment and enhance flexibility. This radical open design ensures discovery of the full spectrum of risks within networks, allowing liquidity to assess, compare and choose an appropriate profile.

Restaking Today

Since its advent, composable capital efficiency has been a core value-proposition of DeFi protocols: users provide liquidity by depositing funds, receive token receipts for those deposits, and then deposit those token receipts elsewhere. In some cases users repeat this cycle multiple times, discovering the full spectrum of yield and risk.

EigenLayer pioneered efficient redeployment of capital for protocols in need of security outside of Ethereum — users are now able to not only iteratively provide liquidity in DeFi, but also restake their staked ETH to secure multiple networks.

EigenLayer’s managed approach towards restaking resulted in early criticisms, but then inspired even greater innovation via attributable, token-gated subjective security. We have the utmost respect for the ground-breaking work EigenLayer has done with restaking.

Current LRTs rely on a consolidated design packaging distinct risks of various AVSs into one big bucket – this prevents liquidity allocators from observing and assessing true risks. In addition, the base staking yield of LRTs is low due to unnecessarily high operational gas costs, while LRTs’ delegates only consist of a small number of node operators, undermining Ethereum’s decentralization. This compelled the Symbiotic team to explore the blue ocean of open, permissionless and market-based restaking.

Symbiotic’s novel approach

Symbiotic clearly delineates the protocol-vs-agents boundary — the immutable core contracts define the unchangeable parts of the protocol, whereas the other fully-customizable components (e.g. collateral assets, rewards, operators, slashing criteria) can be configured by the networks, stakers, and other agents.

[immutable core contracts]    |    [customizable-by-networks components]

This boundary makes restaking fully permissionless and truly open to innovation: the core is highly reliable with no governance and censorship risks, while open-ended external components enable fast deployment, creates a competitive environment, and paves a clearer path for the expansion and derisking of the restaking market. The slashing risk will also be modulated with different implementations employed by networks, uncovering trade-offs within the evolving restaking landscape.

In general, builders prefer immutable and sustainable core functionality that’s stable, as well as sufficient ability to innovate and evolve at the abstraction level critical for their networks. Capital allocators prefer to be able to manage slashing risk against the real yield that demand for staking generates. Both of these market preferences are fulfilled by the functional yet stable design of Symbiotic.

An overview of Symbiotic’s architecture can be found below, with different colors of arrows describing various agent-stories within the protocol. Beyond its permissionless core contracts, the architecture highlights include:

• Multi-asset collateral – ability to restake from other chains via any ERC20 or other forms of collateral like LP tokens;

• Vaults – customizable contracts managing restaked capital;

• Resolvers – customizable veto contracts which can include any automations, veto-committees, oracles, etc.

  

Who’s building Symbiotic

We’ve had the pleasure of knowing and collaborating with Misha and Algys for 7 years. We’ve been deeply impressed with their agency, unique minds for crypto, and of course their leadership at Statemind, one of best auditors in the industry. 

When the team began exploring restaking and then came to us with an early scheme for a permissionless design, we decided to back their next venture, Symbiotic. In particular, we were excited at the prospect of keeping staking and restaking infrastructures distinct, which we continue to feel is critical to stewarding Ethereum’s core value proposition of decentralization and censorship resistance. 

Since backing the team earlier this year, we’ve been impressed by their deep research and the ability to quickly advance the project from the ground-up, e.g. by expanding their core team with stellar hires, including Felix Lutsch, former Chief Commercial Officer at Chorus One, a core contributor to the research and development of liquid staking.

Accelerating cybereconomy with restaking

The world’s economy is transforming, becoming more efficient, more data driven, and more open. We call this the “cybernetic economy”, where AI & humans alike efficiently conduct digital commerce via the internet and neutral blockchains. The fundamental cause for this transition is the market’s constant push towards greater efficiency - we are proud to play an active role in the restaking market by bringing security and capital efficiency to Ethereum and other networks.

Symbiotic’s radically open principles ensure the emergent restaking economy is healthy and self-regulating. By investing in Symbiotic, we not only accelerate the transition to cybereconomy, but also drive the acceleration towards a healthy and more sustainable competitive equilibrium. We are thrilled to partner with Symbiotic on their journey to transform the restaking market.