How Ethena Gives Symbiotic an Edge Over Eigen

Key Takeaways:

• Symbiotic offers a flexible restaking model that supports any ERC-20 asset, enhancing application security with diverse token options.
• Ethena introduces novel strategies like restaking ENA and sUSDe for increased yields through ether staking and futures basis trading.
• Unlike EigenLayer's ETH-centric focus, Symbiotic adopts a market-driven approach, allowing diverse tokens to secure its AVSes and creating broader staking opportunities.

EigenLayer, a pioneering force in the DeFi space, has proven immensely successful in attracting capital, earning a reputation akin to a "black hole" for ether. Since its launch on the Ethereum mainnet just over a year ago, EigenLayer has amassed approximately 5.4 million ETH, reaching a peak valuation of $20 billion in early June. 

The protocol has aggressively raised deposit caps since early 2024 and expanded its acceptance of various forms of ether. By March, deposits surged from under 1 million ETH to around 3 million ETH. This growth trajectory persisted despite the introduction of Karak, an alternative multi-asset restaking model aimed at boosting staking yields.

Expanding on this concept, Symbiotic introduces a groundbreaking feature by supporting any ERC-20 asset for restaking. This innovative approach allows developers to utilize a diverse range of assets to secure their applications, thanks to Symbiotic's flexible restaking model. 

Ethena and Mellow Finance Forge New Paths in DeFi Staking

Recently, Ethena made history by restaking its native token ENA and the staked version of its synthetic dollar, sUSDe. These assets earn yields through ether staking and futures basis trading. 

The sUSDe vault on Mellow Finance, supported by Symbiotic's risk curators, quickly reached its $40 million cap, while the ENA vault filled approximately half its capacity within the first day of deposits.

Both Mellow and Symbiotic have received support from Cyber Fund and are integral parts of the Lido Alliance. Currently, Mellow's vaults exclusively accept Lido staked ether (stETH). 

Ethena's vaults, on the other hand, are curated by three entities: MEV Capital, Re7 Labs, and K3. Laurent Bourquin, a general partner at MEV Capital, anticipates that liquid restaking tokens (LRTs) will soon be accepted as deposits in Symbiotic vaults. 

He highlighted Symbiotic's unique feature of agnosticism, allowing tokens from EigenLayer LRTs to participate, potentially doubling yield tranches through double slashing mechanisms. 

Sunand Raghupathi, co-founder of Veda Protocol and Seven Seas Capital, expressed eagerness from other liquid staking providers to engage with Symbiotic. 

Through Veda, Raghupathi noted the successful launch of an LRT on Symbiotic shortly after its announcement, facilitated by collaborative efforts with Mellow to establish robust restaking infrastructure.

Veda and EtherFi's Partnership: The Rise of 'Super Symbiotic' Vault

Veda partnered with EtherFi on the "Super Symbiotic" vault, accepting ether derivatives like EtherFi’s eETH, converted to stETH for use in Symbiotic. While Symbiotic could theoretically accept eETH directly for double-restaking, EtherFi opts to remove eETH from EigenLayer upon deposit. 

Misha Putiatin of Symbiotic notes the risk of double restaking, though they don't incentivize it. MEV Capital’s Bourquin sees double restaking as inevitable amid current LRT FOMO, despite eventual risks. EigenLayer's AVSes lack slashing conditions, exposing capital to future risks. 

Bourquin values Symbiotic’s decentralizing role. EtherFi expanded into sectors like Liquid, a stablecoin vault managed by Seven Seas, leveraging DeFi for high yields. Integrating with Symbiotic keeps users and stabilizes eETH derivatives against on-chain swaps.

Comparing Staking Strategies: ETH-Centric vs. Market-Driven Approaches

EtherFi maintains user retention despite potential declines in eETH holdings through its brand and frontend integration. According to Raghupathi, EigenLayer advocates against using most assets, emphasizing ETH as a premier secure asset after extensive evaluation. 

In contrast, Symbiotic adopts a market-driven approach to determine suitable collateral for AVS staking.

EigenLayer plans to support dual staking with ETH and bespoke cryptoassets, yet Symbiotic's permissionless design already facilitates this capability. Raghupathi highlights Symbiotic's openness, allowing anyone to create markets and thereby expanding the range of tokens securing AVSes beyond EigenLayer's ETH-centric focus.

FAQs:

• What makes Symbiotic's restaking model unique? Symbiotic supports any ERC-20 asset for restaking, offering developers flexibility in securing applications beyond traditional ETH-based models.
• How does Ethena differ from EigenLayer in staking strategies? Ethena focuses on innovative staking strategies like using synthetic dollars and native tokens for enhanced yields, contrasting with EigenLayer's emphasis on ETH as the primary asset.
• What role does market-driven approach play in Symbiotic's strategy? Symbiotic's market-driven approach allows it to accept a wide range of tokens for staking, catering to diverse market demands and expanding beyond ETH-centric staking models.

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