Lido and Paradigm Invest in Symbiotic - A New Competitor to EigenLayer in the Restaking Sector

Leading liquid staking project Lido and top crypto investment firm Paradigm are reportedly investing in Symbiotic, a new restaking protocol aiming to challenge the dominance of EigenLayer.

Lido and Paradigm Invest in Symbiotic - A Competitor to EigenLayer in Restaking

According to CoinDesk, the co-founders of the DeFi protocol Lido, along with Paradigm, are funding and developing a new restaking project named Symbiotic, which aims to compete with EigenLayer.

Key Points:

• Symbiotic: A new restaking protocol backed by Lido and Paradigm.
• Restaking Flexibility: Allows users to restake liquid staking tokens like stETH and other assets not supported by EigenLayer.
• ERC-20 Support: Symbiotic supports a wider range of ERC-20 tokens for restaking.

Lido and Paradigm invest in Symbiotic. Source: CoinDesk (15/05/2024)

Symbiotic's Features:

1. Broader Asset Support:
Symbiotic will enable users to restake Lido's stETH and other assets currently unsupported by EigenLayer. The leaked documents describe Symbiotic as:

"A protocol that allows users to freely restake, with flexible mechanisms to help decentralized networks share nodes and blockchain security services [through staking]."

2. Advanced Use Cases:
Assets restaked on Symbiotic can be utilized by AVS entities - including layer-2 rollups, blockchain infrastructure platforms, oracles, and more - to secure their protocols, similar to EigenLayer’s operation.

3. Enhanced Flexibility:
Symbiotic can support a diverse range of ERC-20 tokens on Ethereum, providing broader collateral options than EigenLayer, which is currently limited to ETH and liquid staking versions of ETH.

ERC-20 token collateral mechanism for restaking on Symbiotic. Source: CoinDesk

Market Reception and Future Development:

CoinDesk reports that multiple projects currently building AVS on EigenLayer have expressed interest in integrating with Symbiotic. Significant liquid restaking protocols like ether.fi and Renzo are also looking to align with Symbiotic.

Despite being in its early development stages, Symbiotic is gaining traction within the DeFi community. The growing interest indicates a potential shift in the restaking landscape.

Background and Competitive Landscape:

Lido:

• Largest DeFi project in the crypto industry.
• Launched in 2021, allowing users to stake ETH and receive stETH for continued use in DeFi.
• Current TVL of $27 billion.

Top DeFi projects by TVL. Source: DefiLlama (15/05/2024)

EigenLayer:

• Emerged in late 2023, allowing restaking of ETH, stETH, and other tokens to secure external projects.
• Second-largest DeFi project by TVL with $14.3 billion.

Investment Strategies:
Paradigm's involvement in Symbiotic follows their unsuccessful bid to invest in EigenLayer, which chose to receive funding from rival firm a16z.

Restaking Trend in Crypto:

The restaking trend is gaining significant attention in the crypto space, with major market players backing these projects. Apart from EigenLayer and Symbiotic, another notable restaking protocol is Karak, with Coinbase being a key investor.

Conclusion:

Lido and Paradigm's investment in Symbiotic marks a significant move in the evolving restaking sector. With Symbiotic’s broader asset support and innovative mechanisms, it stands as a formidable competitor to EigenLayer, potentially reshaping the landscape of decentralized staking and blockchain security.