This news article reports on the recent success of EigenLayer in the field of re-collateralization and the potential disruptive change brought about by Symbiotic with its “stake any asset” design. EigenLayer has become a “black hole” in the Ethereum space, attracting significant capital and becoming one of the largest DeFi protocols in the process. Symbiotic, on the other hand, enters the shared security space with its design supporting “staking any asset,” which may bring about revolutionary changes.
Since its launch on the Ethereum mainnet over a year ago, EigenLayer has absorbed approximately 5.4 million ETH, reaching a peak value of $20 billion in early June. The protocol has actively raised deposit limits since early 2024 and has started accepting more types of Ethereum. By March, deposits had increased from less than 1 million ETH to about 3 million. This growth rate has continued after the launch of Karak, a multi-asset re-collateralization model aimed at increasing staking rewards.
Symbiotic further deepens this concept by supporting any ERC-20 asset as collateral for re-collateralization. This customized option and flexible re-collateralization model allow developers to use a variety of assets to secure their applications. Yesterday, Ethena’s native token ENA and its staked version of synthetic dollar, sUSDe, became the first non-ETH assets to be staked on Symbiotic. sUSDe earns revenue through Ethereum staking and futures basis trading.
The new sUSDe insurance pool on Mellow Finance’s risk management platform on Symbiotic quickly reached a limit of $40 million, while the ENA insurance pool was half full the day after deposits were made. Both Mellow and Symbiotic are supported by Cyber Fund and are part of the Lido Alliance, with other Mellow insurance pools currently only accepting Ethereum staked with Lido (stETH).
The Ethena insurance pool has three managers: MEV Capital, Re7 Labs, and K3. Laurent Bourquin, a general partner at MEV Capital, expects liquid re-collateralization tokens (LRTs) to be accepted as deposits in Symbiotic insurance pools.
The main difference with Symbiotic is its “indiscrimination,” allowing EigenLayer’s LRTs to enter Symbiotic. This will result in double reduction and double revenue.
Other liquid staking and re-collateralization providers are also eager to enter this space. Sunand Raghupathi, co-founder of Veda Protocol and Seven Seas Capital, stated that shortly after Symbiotic’s launch, they were able to launch an LRT on Symbiotic through Veda.
Veda partnered with EtherFi to launch the “super Symbiotic” insurance pool, which accepts various Ethereum derivatives, including EtherFi’s eETH, and converts it to stETH for Symbiotic use. Technically, Symbiotic can accept eETH itself, which would result in double staking – first on EigenLayer, then on Symbiotic – but this is not EtherFi’s practice. If a user provides eETH, it will first be removed from EigenLayer. Misha Putiatin, co-founder of Symbiotic, pointed out that double staking is inherently risky. While they cannot prevent people from double staking, they have no plans to incentivize this behavior.
Bourquin of MEV Capital believes that double staking is inevitable. Currently, due to the lack of a reduction mechanism on EigenLayer, this risk has been temporarily set aside. Deposits accepted by EigenLayer can be entrusted to Active Verification Services (AVS), but there is currently no AVS that has enabled reduction conditions, which will ultimately expose depositors’ funds to greater risk. Bourquin sees Symbiotic’s flexibility as a clear advantage.
EtherFi was originally a re-collateralization protocol for EigenLayer, but has since become a trusted brand in other areas, such as the launch of Liquid, a stablecoin insurance pool managed by Seven Seas, which earns high returns through various DeFi channels such as liquidity provision, loan optimization, and price arbitrage. By allowing its users to participate in Symbiotic, EtherFi can retain these users in its ecosystem and capture some capital flow. This approach provides an alternative to avoid on-chain liquidity pool conversion of eETH, which could put pressure on the stability of derivatives.
Even if the quantity of eETH is reduced as a result, EtherFi can still retain these users through its brand and front-end.
EigenLayer believes that most assets should not be used for this purpose, and it took a long time for them to realize that ETH is the king of safe assets in a sense. Symbiotic, on the other hand, believes that market forces should determine what is suitable collateral for AVS staking. EigenLayer does have plans to support double staking using ETH and a custom crypto asset, but Symbiotic’s permissionless design can achieve this today.
Anyone can create markets on Symbiotic, so the variety of tokens used to secure AVS on Symbiotic will be much greater than EigenLayer, which is very focused on ETH.
