Symbiotic: Permissionless Restaking
Symbiotic has recently launched with a lot of impact. It’s a restaking protocol that provides smart contract infrastructure which is fit for “empowering network builders to control and adapt their own (re)staking implementation in a permissionless manner.” This article explains why Symbiotic is capturing mindshare and why Pier Two is excited to be involved whilst providing a view of the restaking ecosystem as an Operator.
The Restaking Story is Evolving
Symbiotic’s recent launch adds to the growth story of restaking; which, with Symbiotic’s contribution, has grown to a $20bn TVL phenomena in less than a year. But, let’s start with the basics. Restaking at its core is actually quite simple and you can draw a parallel to the world of insurance.
People and funds will invest in insurance products for a policy and return respectively. The quality of that insurance product is based on the risk that it insures against and the payout structure for claims. To us, this looks a lot like the restaking ecosystem; where, instead of policies for cars and property, policies exist for decentralised services like sequencers, oracles, compute and more.
Decentralised services, referred to as “Networks” in the Symbiotic ecosystem (or “AVS’” in the EigenLayer ecosystem) are effectively buying an insurance policy from a pool of restaked capital and rewarding that restaked capital for providing security in the form of crypto-economic guarantees.
Restaking Vaults: A New Meta for Decentralised Services
Why should people care about restaking, associated new networks and all of the hype? What problems are actually being solved?
In Pier Two’s view, the challenges of coordinating node operator networks, structuring crypto-economic guarantees and building sustainable incentive structures are not simply solved. Restaking protocols like Symbiotic offer a simple pathway for decentralised services to solve these problems. The recent Ethena Announcement demonstrates how Symbiotic achieves this simply, by enabling ENA to provide security for USDe that is being transacted cross-chain via LayerZero.
It’s easier for network builders and decentralised services to use restaking infrastructure, with an existing group of node operators and slashing configurations, to coordinate the cryptographic guarantees and incentives required to maintain and secure decentralised infrastructure than to try and do it all yourself.
A Operator’s View of Symbiotic
The Symbiotic stack is focused on modularity at its core and offers a scalable model for Operators to engage in running infrastructure, whilst enabling them to focus on security and uptime. The Symbiotic model enables Operators on the Symbiotic registry to ‘opt in’ to different network services.
It’s worth noting, that in the above case, the ‘resolver’ is somewhat like the ‘assessor’ in the case of the insurance analogy. Where the resolver can be on-chain arbitration systems or any other oracle or security configuration.
For Pier Two, we can support multiple Networks as a single Operator for different restaking clients, without having to set up any isolated infrastructure, enabling us to focus a single core system and scale it for security and redundancy.
Operators like Pier Two will opt into running networks (like sequencers, oracles, bridges, compute, etc.) who are sourcing their security from restakers. Restakers will choose to delegate their tokens to Operators either directly via a vault, or indirectly via LRTs and institutions focused on distributing restaking products. In the event that Pier Two performs duties against the interest of a decentralised service (failure to submit transactions or proofs, downtime, manipulating the network etc.) the restaked assets delegated to Pier Two could be at risk. With Symbiotic’s scalable infrastructure, Pier Two can focus on security, redundancy and performance to ensure that risks to restaked assets are minimised.
Participating in the Restaking Economy
The key takeaway for restakers is this: restaking protocols will attract different Networks to deploy on top of them; depending on a variety of parameters, including collateral quality, security features and flexibility of infrastructure and support. This will lead to an array of investible restaking opportunities that will differ in risk and return profiles. Protocols like Mellow are providing contract infrastructure to capture these opportunities and making them liquid. Distributors of Symbiotic restaking such as Ether.fi and Swell have already built incentive models and more on-chain capital aggregators will follow as Symbiotic continues to enable more collateral types. Right now, across the restaking industry, there exists no slashing. It’s important to continue to assess the risk profile of restaking opportunities as slashing parameters are introduced.
Congratulations to the Symbiotic team on a successful launch.
Pier Two is eager to support Symbiotic as an Operator and partner and play a critical role in growing the decentralised restaking economy.
Reach out to Pier Two
To our partners and community: keep Symbiotic on your radar and feel free to speak to us if you want to learn more. Don’t hesitate to reach out if you aren’t already in touch: media@piertwo.com
Pier Two is an institutional grade staking and infrastructure provider, based in Australia, securing billions in assets across many networks. We provide highly secure and performant infrastructure for our exchange, fund, custody and network partners. We contribute to the open-source community and network effects of Ethereum by building the light client Lantern in C#.