After launching in June 2024, Symbiotic, a new protocol on Ethereum, faced rapid growth and crossed above $1.26 billion TVL within a month, which made it the second most market-holding restaking protocol after EigenLayer. The protocol is reshaping the landscape of decentralized finance by introducing an innovative approach to restaking and cross-chain capital efficiency. The protocol not only enables networks to harness the power of diverse collateral assets but also enables them to operate without needing isolated infrastructure. This innovative approach enhances security and scalability and introduces unparalleled capital efficiency, offering a transformative solution for the crypto economy.

What is Symbiotic?

Symbiotic is a shared security protocol designed to enhance the security and scalability of decentralized networks through permissionless restaking. It provides a modular coordination layer that integrates easily with various network architectures, offering customizable punishment, sovereign ecosystems, and reward mechanisms. The platform focuses on capital-efficient sourcing of node operators and extends economic security via a scalable architecture. Symbiotic enables networks to adjust to evolving requirements without unnecessary governance or permission.

What is Restaking?

Restaking is a practice of utilizing staked assets or liquidity assets and then again staking them on different networks or protocols to provide additional security and functionality to multiple blockchain networks or protocols. By allowing assets to be staked in multiple places, restaking enhances the security and efficiency of these networks without requiring additional capital. This can increase the overall utility and return on investment for stakers while contributing to the robustness and flexibility of the blockchain ecosystem.

Background

The Symbiotic team is composed of professionals with diverse backgrounds in technology, management, and blockchain sectors. Misha Putiatin, the Chief Executive Officer, brings a strong foundation in computer engineering and finance, with experience at KPMG, VTB Capital, and MixBytes, a blockchain auditing firm. Algys Levlev, the founder & head of audit, has a rich background in software development and held the position of Chief Technology Officer at Mail.Ru Group before co-founding Statemind and the Symbiotic project. Mariia Zhuravleva, the Chief Operating Officer, has experience in operational roles across various industries, including at Rossoil, Cointelegraph, Moeco, Woodenshark, and Alter. Egor Aganin, the blockchain auditor, has developed several software and blockchain applications. His experience includes roles at eKassir, Cardsmobile, WOWswap, and ITPO Group.

Symbiotic was founded in 2023 in the United Arab Emirates, marking the beginning of a new era in decentralized finance. On June 11, 2024, Symbiotic initiated its Seed funding round, successfully raising over $5.8 million from notable investors, including Paradigm and cyber.Fund. Launched in June 2024, the protocol’s growth track was nothing short of impressive. Within just one month, Symbiotic achieved a total value locked (TVL) of $1.3 billion, demonstrating its rapid adoption.

How does the Symbiotic Protocol Work?

Symbiotic supports any ERC-20 token, enabling cross-chain capital efficiency by allowing users to choose their collateral assets, node operators, and rewards from various restakers and networks. To take assets from Vault, users must delegate predefined ERC-20 tokens as collateral in their trusted Vaults to withdraw liquidity assets. In Symbiotic, Vault is an intermediary between users, the network, and operators, allowing users to delegate their assets. Running the Vault securely, the Symbiotic protocol creates a registry of operators, logs interactions with the protocol, and protocol participants can attach credentials and other data to operator entities. If any dispute is created between users and networks, an entity called “Resolver” will arbitrate slashing penalties by approving or vetoing slashing requests within a specified time frame. Resolvers ensure fairness and enable networks and restakers to share collateral securely.

Symbiotic Features

The Symbiotic protocol offers a range of innovative features designed to enhance the security, scalability, and efficiency of blockchain networks. Here are some key features:

Permissionless

The Symbiotic permissionless restaking and immutable core contract features allow Symbiotic builders control over shared security agreements. It allows protocol users to redeploy their staked assets across multiple networks without requiring additional permissions, which maximizes the utility of their assets, increases their potential rewards, and enhances the overall security of the networks.

Modular Coordination

Symbiotic provides a modular coordination layer that integrates with different network architectures. This flexibility allows networks to implement Symbiotic solutions without major overhauls of their existing systems. The coordination layer is designed to be adaptable, providing the necessary tools and frameworks for networks to manage staked assets.

Customizable Mechanisms

It provides full flexibility to the networks using the Symbiotic protocol for customizable punishment and reward mechanisms. Networks can adjust these mechanisms to align with their specific security requirements and operational goals. This customization enables networks to incentivize desired behaviors among participants and penalize malicious activities.

Capital Efficiency

The protocol’s design optimizes available resources, allowing networks to leverage their staked assets. It highlights capital efficiency by sourcing node operators cost-effectively. This maximizes the economic security provided by the staked assets, ensuring that networks can achieve high levels of security without excessive expenditure.

Scalable Architecture

Symbiotic’s scalable architecture allows it to grow alongside the networks. Symbiotic can adjust without significant changes or additional governance overhead as network requirements evolve. This scalability ensures the protocol remains relevant and effective as the blockchain ecosystem expands.

Components of the Symbiotic Protocol

The Symbiotic protocol comprises five critical interconnected components to enhance blockchain network functionality.

Collateral

The collateral concept brings capital efficiency, a security layer, and scalability by allowing assets used to secure Symbiotic networks to be held outside the Symbiotic protocol, such as in DeFi positions on other networks. The Symbiotic does that by slashing assets from underlying assets, similar to how liquid staking tokens create tokenized representations of underlying stakes. All underlying collateral assets in Symbiotic are ERC-20 tokens with extended functionality to handle slashing incidents. For example, ETH (Liquid Staking Tokens) can be used as collateral if a Burner contract can withdraw and burn ETH from the Beacon chain. Native assets, like governance tokens, can also serve as collateral with a “black-hole” contract or address for burning.

Vaults

This is a delegation and restaking management layer of the Symbiotic protocol, facilitating the delegation of collateral to operators across networks. It basically handles three crucial parts of the Symbiotic economy.

1. Accounting: vaults handle deposits, withdrawals, and slashings of collateral and, in turn, their underlying assets.
2. Delegation Strategies: vault deployers and owners define delegation and restaking strategies for operators across Symbiotic networks, which networks have to opt into.
3. Reward Distribution: vaults distribute staking rewards from networks to collateral depositors.

The vaults can be customized by operators and curators. They also support delegations to operator-specific vaults. Each vault has predefined collateral types and corresponding burner contracts for handling slashing, if applicable and networks must accept these terms to receive rewards. However, the rewards within the vault can be in different tokens.

Networks

In the Symbiotic protocol, networks allow developers to create new decentralized applications and deliver services within the crypto economy. These include enabling decentralized application launches, providing off-chain data to applications, and ensuring cross-network interactions. The decentralized networks can use Symbiotic to source their security through operators and economic backing. The protocol’s modular structure allows for defining engagement rules for participants, catering to protocols that may consist of multiple sub-networks with various infrastructure roles. All the networks in the Symbiotic are represented as a network address and middleware contract which must incorporate custom logic and slashing logic. This setup allows the core protocol to manage essential functions such as slashing operators and rewarding stakers and operators.

Operators

Also known as validators, sequencers, guardians, and keepers. Basically, operators in the Symbiotic protocol are entities responsible for running infrastructure for decentralized networks within and outside the Symbiotic ecosystem. The protocol maintains a registry of operators, logging interactions and allowing participants to attach credentials and data to operators. Initially, this includes metadata provided by operators and data from interactions with the protocol. The Symbiotic protocol and its vault system enable operators to receive stakes from different partners through vaults in the same set of node infrastructure per supported network. This allows node operators to aggregate stakes from a diverse set of stakers with varying risk profiles without the need for isolated infrastructure setups. In the upcoming days, the protocol will be able to get more rich, verifiable data and curated credentials about node operators.

Resolvers

Resolvers are dispute resolution committees that have veto power. They are (entities or contracts) responsible for approving or vetoing slashing penalties incurred by operators on networks they service and can be shared across the networks. These resolvers are agreed upon by vaults representing economic security providers and the networks they secure. A resolver in the Symbiotic protocol can veto slashing requests in the slasher module of the vault. It monitors slashing requests and has a specific time window to either veto or approve the request. If the resolver does not veto within this timeframe, the slashing request is considered approved. Each slashing request comes with its own veto deadline, as defined by the vault.

Contracts Architecture in Symbiotic

The Symbiotic protocol features a sophisticated contract architecture designed to support its modular and scalable infrastructure. This architecture ensures the secure and efficient operation of the protocol, facilitating its core functionalities, including staking, collateral management, and operator coordination. The key aspects of Symbiotic contract architecture include:

Upgradability:

• Immutable: The contract cannot be upgraded.
• Migratable: The contract can be upgraded by its owners to newer versions provided by its factory.
• Not Specified: The contract may or may not be upgradeable.

Accessibility:

• Vault Factory: Ownable, allowing the owner to whitelist new Vault implementations.
• Vault: Ownable for migration to newer versions and includes AccessControl for its functions.
• Collateral and Rewards Distributor: Can have any accessibility level.

Symbiotic Point System

Symbiotic allows users to earn points by restaking their assets within the platform. Users can go to platforms like Pendle or Ether.fi to deposit liquidity into the Symbiotic pool, allowing them to farm additional points for Ether.fi and Veda. However, the Symbiotic team hasn’t officially announced the purpose of these points or if they will be considered for a future token airdrop.

To participate, connect your wallet to the Symbiotic app, go to “Restake” in the top menu, and select an available pool. Enter your desired amount and deposit it by granting permission through your wallet. You can view your deposits, points, and collateral in the “Dashboard” section.

Partnerships

Symbiotic partnerships enhance its ecosystem by collaborating with various entities to support network security, scalability, and interoperability. Some of the network partners are exploring Symbiotic restaking.

Conclusion

As the staking ecosystem continues to grow, the Symbiotic, adaptable and modular design positions it as a key player, setting new standards for interoperability and scalability. The protocol’s support for the adaptability and direct deposit of ERC-20 tokens highlights its importance, particularly as Ethereum transitions to a proof-of-stake consensus mechanism. The Symbiotic shared security model and cross-chain capital efficiency make it an ideal platform for new projects that wish to leverage existing security infrastructures without creating their own tokens. This innovative approach not only enhances network security but also facilitates the seamless integration of diverse assets, making Symbiotic a major player in the evolving landscape of decentralized finance.