New restaking protocol Symbiotic exceeds $1 billion in total value locked

Symbiotic has attracted 318,227 ETH since its launch less than a month ago, gaining ground on first mover EigenLayer, which holds 5.09 million ETH in its smart contracts.

The new restaking protocol Symbiotic has attracted over $1 billion in the form of its smart contracts since its launch less than a month ago.

According to data from blockchain analytics firm DefiLlama, Symbiotic’s total ETH-denominated value locked has more than tripled in the past 24 hours, from nearly 92,000 ETH to 318,227 ETH at press time.

The rapid increase in Symbiotic’s total value locked helps the young protocol lay the foundation to crack EigenLayer’s massive lead. Since Symbiotic entered the restaking scene on June 11, EigenLayer’s ETH-denominated TVL has dropped by about 220,000 ETH, which is equivalent to about $723.6 million at current prices.

Restaking is a technique that allows protocols to share the security of an underlying chain like Ethereum without having to set up their own validators.

EigenLayer was the first protocol to introduce restaking to the Ethereum ecosystem in 2021 when Eigen Labs was founded. It has garnered significant interest and has attracted $16.8 billion in total value locked so far, making it the second-largest DeFi protocol after liquid staking protocol Lido.

Read more: EigenLayer has two new competitors: Symbiotic and Karak. What’s the difference?

Since restaking currently doesn’t yield any yield, only points and airdrops, Pavel Yashin, a researcher at blockchain validation company P2P.org, said it might be more attractive for some EigenLayer farmers to switch to Symbiotic if they expect better allocation or a more convenient integration flow.

“Thus, Symbiotic can cannibalize the LST portion (especially stETH) of EigenLayer’s TVL,” Yashin wrote to Unchained. Data from blockchain analytics firm Nansen shows that one of EigenLayer’s smart contracts is the third-largest holder of stETH.

An actively validated service (AVS) launched on EigenLayer in May is currently exploring Symbiotic’s architecture after its team spoke with the new restaking participant. According to its co-founder, who wishes to remain anonymous, the team is looking into potential incentives offered by Symbiotic.

Lift caps

On Wednesday, Symbiotic team members increased deposit limits on the various cryptocurrencies the company currently accepts, including several types of liquid staking tokens as well as coins tied to synthetic dollar protocol Ethena, a high-profile protocol with $3.6 billion in TVL.

“After 4 hours, Symbiotics cap of 210,600 wstETH has been reached. Other assets can still be staked and caps will increase over time. More assets will be added as we continue with the initial scaling of the protocol.” wrote the Symbiotic team on X.

At press time, Ethena’s sUSDe, Frax Finance’s sfrxETH, Swell Network’s swETH and Mantle’s mETH have also reached their limits, while the liquid staking tokens issued by Coinbase, Binance and Rocket Pool have not, as seen on Symbiotic’s homepage.

Lido loses dominance to EigenLayer and relies on its competitor

Symbiotic is backed by venture capital firms Paradigm and cyber•Fund, an early backer of Ethereum, and led by the co-founders of Lido.

Although Lido holds the top spot as the leading DeFi protocol with a TVL of $32 billion, its dominance has been declining. According to DefiLlama, not only has Lido’s TVL dropped from 10.62 million ETH on March 6 to 9.77 million at press time, but its share of total ETH staked has also dropped from around 31% to 29% over the same period, a percentage not seen since February 2023, according to a Dune Analytics dashboard. created by crypto analyst Hildobby.

Read more: Lido takes first step toward decentralizing Ethereum node operator amid SEC allegations

On the other hand, despite the decline in TVL in ETH over the past 30 days, EigenLayer’s TVL has increased from 2.98 million ETH in the first week of March to 5.09 million ETH at press time. The inverse relationship between Lido and EigenLayer suggests that some crypto users have been leaving Lido’s validator set and flocking to EigenLayer through native restaking.

CoinDesk previously reported that Paradigm did not invest in EigenLayer because the restaking protocol’s co-founder, Sreeram Kannan, chose to accept capital from Andreessen Horowitz instead.

Collaboration with well-known protocols

Although it lags far behind EigenLayer, Symbiotic has partnered with notable protocols across the DeFi space, attracted by new incentives and seeing a saturation of existing players already building on EigenLayer.

On the same day that Symbiotic launched, Lido announced partnerships with Mellow Finance and Symbiotic through the launch of restaking vaults, which will allow Lido stETH holders to, among other things, re-stake their liquid staking tokens, according to a Lido blog post.

Symbiotic has also partnered with restaking platforms Swell Network, EtherFi, and Renzo, which have a combined TVL of over $11 billion, as well as yield tokenization platform Pendle Finance, which has a TVL of nearly $3.7 billion. All four are choosing Symbiotic in addition to Eigenlayer, not as a replacement for it.

Meanwhile, Ethena, a protocol known for its yield-generating synthetic dollar with a TVL of over $3.6 billion, plans to use Symbiotic for its upcoming blockchain and has not yet signed up with Eigenlayer.

“We obviously love EigenLayer and that will continue to be our main partner,” EtherFi CEO Mike Silagadze told Unchained via Telegram, “but we want to do what users want, and users want to restake across different protocols.” Silagadze assumes EtherFi users wanted to restake via Symbiotic “to earn more points across more than one restaking protocol.”