Symbiotic has attracted 318,227 ETH since its inception less than a month ago, gaining some ground against restaking first mover EigenLayer, which has 5.09 million ETH in its smart contracts.
Posted July 3, 2024 at 9:16 pm EST.
Nascent restaking protocol Symbiotic attracted over $1 billion in its smart contracts since its inception less than a month ago.
According to data from blockchain analytics firm DefiLlama, Symbiotic’s total value locked denominated in ETH has more than tripled over the past 24 hours from almost 92,000 ETH to 318,227 ETH at presstime.
Symbiotic’s rapid increase in total value locked helps the young protocol lay the groundwork to eat into EigenLayer’s massive head start. Since Symbiotic entered the restaking scene on June 11, EigenLayer’s TVL denominated in ETH has decreased by about 220,000 ETH worth about $723.6 million at current prices.
Restaking is a technique that enables protocols to share the security of an underlying chain like Ethereum without having to establish their own validators.
EigenLayer, the first to introduce restaking to the Ethereum ecosystem in 2021 when Eigen Labs was founded, has generated substantial interest and so far attracted $16.8 billion in total value locked, making it the second-largest DeFi protocol behind liquid staking protocol Lido.
Read More: EigenLayer Has 2 New Competitors, Symbiotic & Karak. How Are They Different?
Since restaking doesn’t provide yield yet, just points and airdrops, Pavel Yashin, a researcher for blockchain validator firm P2P.org, said some EigenLayer farmers may find it more appealing to switch to Symbiotic if they expect a better allocation or a more convenient integration flow.
“Thus, Symbiotic can cannibalize the LST (stETH specifically) part of EigenLayer’s TVL,” Yashin wrote to Unchained. Data from blockchain analytics firm Nansen shows how one of EigenLayer’s smart contracts is the third largest holder of stETH.
An actively validated service (AVS) that launched on EigenLayer in May is currently exploring Symbiotic’s architecture after its team talked with the new restaking entrant. According to its co-founder, who requested anonymity, the team is assessing potential incentives offered by Symbiotic.
Raising Caps
On Wednesday, Symbiotic team members increased the limits of its deposit caps for the various cryptocurrencies it currently accepts, such as several types of liquid staking tokens as well as coins connected to synthetic dollar protocol Ethena, a high-profile protocol that has $3.6 billion in TVL.
“After 4 hours, Symbiotic’s 210,600 wstETH cap has been reached. Other assets can still be staked, and caps will be increased over time. More assets will be added as we continue the initial scaling of the protocol,” wrote the Symbiotic team on X.
At presstime, Ethena‘s sUSDe, Frax Finance’s sfrxETH, Swell Network’s swETH, and Mantle’s mETH have also reached their limit, while liquid staking tokens issued by Coinbase, Binance, and Rocket Pool have not, as shown on Symbiotic’s homepage
Lido, Losing Dominance to EigenLayer, Backs its Competitor
Symbiotic is supported by venture firm Paradigm and cyber•Fund, an early backer of Ethereum and led by the co-founders of Lido.
While Lido holds the top position as the leading DeFi protocol with a TVL of $32 billion, its dominance has weakened. Not only has Lido’s TVL decreased from 10.62 million ETH on March 6 to 9.77 million at presstime, per DefiLlama, but its share of total staked ETH has also decreased from around 31% to 29% in the same time period, a percentage level that has not been touched since Feb. 2023, according to a Dune Analytics dashboard created by crypto analyst Hildobby.
Read More: Lido Takes Initial Step to Decentralize Ethereum Node Operator Set Amid SEC Allegations
On the other hand, despite EigenLayer’s TVL drop in ETH in the past 30 days, zooming out, its TVL jumped from 2.98 million ETH in the first week of March to 5.09 million ETH at presstime. The inverse relationship between Lido and EigenLayer suggests some crypto users have left Lido’s validator set and flocked to EigenLayer through native restaking.
CoinDesk previously reported that Paradigm did not invest in EigenLayer, because the restaking protocol’s co-founder decided to accept capital from Andreessen Horowitz instead.
Collaborating with Big-Name Protocols
Although it is far behind EigenLayer, Symbiotic has been racking up partnerships with big-name protocols across DeFi, which are attracted to new incentives and see a saturation of existing players already building on EigenLayer.
On the same day Symbiotic launched, Lido announced partnerships with Mellow Finance and Symbiotic through the introduction of restaking vaults, enabling Lido stETH holders to restake their liquid staking tokens, among other things, per a Lido blog post.
Symbiotic has also partnered with restaking platforms Swell Network, EtherFi and Renzo, which have a combined TVL surpassing $11 billion, as well as yield tokenization platform Pendle Finance, with nearly $3.7 billion in TVL. All four are choosing Symbiotic in addition to Eigenlayer, not as a replacement to it.
Meanwhile, Ethena, a protocol known for its yield-bearing synthetic dollar with a TVL exceeding $3.6 billion, plans to use Symbiotic for its upcoming blockchain and has so far not yet signed on with Eigenlayer.
“We obviously love EigenLayer and that will continue to be our flagship partner,” said EtherFi CEO Mike Silagadze to Unchained over Telegram, “but we want to do what users want and users want to restake across different protocols.” Silagadze assumes EtherFi users wanted to restake through Symbiotic “to earn more points across more than one restaking protocol.”
Powered by WPeMatico
