Symbiotic, a rising star in the re-staking track and Eigenlayer’s main competitor, has launched and attracted $200 million in deposits in one day. After the EigenLayer airdrop, the project has been expected to become the next re-staking project to bring lucrative airdrops.
Ignas丨Defi Research wrote an article about Symbiotic, comparing the project to EigenLayer, explaining its advantages, and sharing how to farm the project’s potential airdrop.
The following content was written by Ignas丨Defi Research and compiled by Followin:
This week, I was originally writing a blog post about emerging trends in cryptocurrency, but had to quickly change the subject to focus on restaking.
Reason: Eigenlayer's main competitor, Symbiotic, had just launched, and the $200 million deposit limit was reached almost in one day. Emerging trends can wait, but high-yield farming opportunities cannot.
In addition to Karak, we now have three re-staking protocols. So, what’s going on, how do they differ, and what should you do?
The motivation behind the launch of Symbiotic
According to rumors, Paradigm approached Eigenlayer co-founder Sreeram Kannan about investing in the project, but Kannan chose its competitor Andreessen Horowitz (a16z). a16z led EigenLayer's $100 million Series B round.
Since then, Eigenlayer has grown to become the second largest DeFi protocol with a total locked value of $18.8 billion, second only to Lido’s $33.5 billion. In the OTC market, the FDV of EIGEN tokens, which are not yet transferable, has reached $13.36 billion.
Considering that Eigenlayer is valued at $500 million FDV in March 2023, this represents a 25x increase in paper earnings.
It’s no surprise that Paradigm was unhappy. In response, Paradigm funded Symbiotic, positioning it as a direct competitor to Eigenlayer. Symbiotic raised $5.8 million in seed funding from venture capital giants Paradigm and cyber•Fund.
It is not known what the project's valuation is at this time.
Paradigm’s rivalry with a16z is well known, but there’s a second part to the story.
Symbiotic’s second largest investor, Cyber Fund, was founded by Lido co-founders Konstantin Lomashuk and Vasiliy Shapovalov. 
Coindesk reported in May that “people close to Lido see Eigenlayer’s restaking approach as a potential threat to its own dominance.”
Lido missed the Liquid Restaking Token (LRT) trend. In fact, stETH’s TVL has stagnated over the past three months, falling by 10%. Meanwhile, EtherFi and Renzo have seen a surge in inflows, reaching $6.2 billion and $3 billion in TVL, respectively. 
Re-staking with LRT is obviously more attractive as it offers higher yields, although most of it is essentially farming points at the moment.
To strengthen Lido’s position, Lido DAO launched the “Lido Alliance” with the development of a permissionless, decentralized re-staking ecosystem as its top priority.
“…taking into account the rapid rise of the re-staking market, among other factors. In response to some of his calls, we propose the following framework to support the emergence of an ecosystem around stETH while keeping the protocol intact.”
By the way, one of the strategic priorities outlined is to reaffirm stETH as an LST rather than becoming an LRT.
This is great because we get more tokens and more airdrop farming opportunities.
Just one month after initial discussions, a lead member of the alliance (Mellow) has launched LRT deposits on Symbiotic, backed by stETH deposits!
But before we dive into the unique features and farming opportunities of Mellow LRT, let’s take a step back and discuss how Symbiotic differs from Eigenlayer.
Symbiotic and Eigenlayer
1) Symbiotic: Permissionless and modular
Symbiotic stands out for its permissionless and modular design, providing greater flexibility and control. Their main standout features are:
- Multi-asset support:
Symbiotic allows direct deposits of any ERC-20 token, including Lido’s stETH, cbETH… This makes Symbiotic more versatile compared to Eigenlayer, which focuses mainly on ETH and its derivatives (as far as I know, Eigenlayer can support any other assets in the future).
- Customizable parameters:
Networks using Symbiotic can choose their collateral assets, node operators, rewards, and slashing mechanisms. This modularity gives networks more freedom to adjust their security settings to their specific needs.
- Immutable core contracts:
Symbiotic’s core contracts are not upgradeable (like Uniswap), which reduces governance risk and potential failure points. Symbiotic can continue to operate even if the team disappears.
- Permissionless Design:
By allowing any decentralized application to integrate without approval, Symbiotic provides a more open and decentralized ecosystem.
Being “symbiotic” means “to run away from competition like fire, to be as selfless as possible, and as non-opinionated as possible,” Misha Putiatin, co-founder and CEO of Symbiotic, told Blockworks.
Misha also told Blockworks that “Symbiotic will not compete with other market participants — so no native staking, rollups, or data availability products.”
When dApps launch, they typically need to manage their own security model. However, the permissionless, modular, and flexible Symbiotic design allows anyone to protect their network using shared security.
“The goal of our project is to change the narrative - you don’t have to launch locally - it’s safer and easier to launch on us, on shared security,” - Misha told Blockworks.
In practice, this means that crypto protocols can launch native staking for their own native tokens to improve network security. For example, Ethena has partnered with Symbiotic to achieve cross-chain security for USDe by staking ENA.
Ethena is integrating Symbiotic with LayerZero’s Decentralized Validator Network (DVN) framework to secure Ethena assets (e.g. $USDe) across chains via staking $ENA. This is the first of several parts of its infrastructure and systems designed to leverage staking $ENA — Symbiotic blog post.
Other use cases include cross-chain oracles, threshold networks, MEV infrastructure, interoperability, shared sorters, and more.
Symbiotic was launched on June 11, and the deposit limit for stETH was reached within 24 hours. 
More on drop farming methods later.
2) Eigenlayer: Management and integration methods
Eigenlayer uses a more managed and integrated approach, focusing on leveraging the security of Ethereum ETH stakers to support a variety of dApps (AVS):
- Single asset focus :
Eigenlayer primarily supports ETH and its derivatives. This focus may limit flexibility compared to Symbiotic's broader multi-asset support. Although more assets can be added.
- Centralized Management :
Eigenlayer manages the staked ETH and delegates it to node operators, who then verify various AVS. This centralized management helps simplify operations, but can lead to bundling risks, making it more difficult to accurately assess the risks of individual services.
- Dynamic Market :
Eigenlayer provides a market for decentralized trust, allowing developers to launch new protocols and applications using pooled ETH security. Risk is shared by pool depositors.
- Reduction and governance :
Eigenlayer’s management approach includes specific governance mechanisms for handling slashing and rewards, which may reduce flexibility.
To be honest, Eigenlayer is an extremely complex protocol, and its risks and overall functionality are beyond my comprehension, haha. I had to compile criticisms from various sources to write this section. One of them was Cyber Fund itself.
I don't take sides, and I believe DeFi geeks will hotly debate the comparison between Symbiotic and Eigenlayer.
Say Hello to Mellow Protocol: Modular LRT
What impressed me most about the Symbiotic launch was that LRT was immediately launched on top of Symbiotic on the Mellow protocol. As a Lido Alliance member, Mellow benefits from Lido’s marketing, integration support, and bootstrapping liquidity.
As part of the deal, Mellow will reward Lido with 100,000,000 MLW tokens (10% of the total supply), which will be locked in the Lido Alliance legal entity after the TGE.
These tokens will be subject to the same vesting and cliff terms as the team tokens: a 12 month cliff period following the TGE, and a 30 month vesting period beginning thereafter (edited based on feedback received).”
Two other benefits are mentioned in the coalition proposal:
- “Mellow will help spread the geographic and technical decentralization work that Lido is doing beyond Ethereum validation.”
- “Lido node operators can launch their own composable LRTs and control the risk management process by choosing an AVS that fits their needs, rather than facing the imposition of an LRT or re-collateralization protocol.”
The impact of the partnership will take time to be felt, but LDO is up 9% in 24 hours.
Interestingly, the $42 million cap for the four LRT pools had already been reached before the Lido partnership tweet below.
Anyway, if you are familiar with Eigenlayer LRTs such as Etherfi and Renzo, you will know that the fun of depositing Mellow is double: you can get both Symbiotic and Mellow points.
But Mellow is different from Eigenlayer LRT…
What problems does Mellow solve for LRT?
The Mellow protocol allows anyone to deploy LRT. Hedge funds, staking providers (Lido!). Even me (in theory).
This also means that the amount of LRTs has increased dramatically, compromising their liquidity and complicating their integration with DeFi protocols. 
But it has some advantages:
- Diversified risk profile :
Current LRTs often force users into a one-size-fits-all risk profile. Mellow allows for multiple risk adjustment models, allowing users to choose the risk exposure they prefer.
- Modular infrastructure :
Mellow’s modular design allows shared security networks to request specific assets and configurations. Risk managers can then create highly modified LRTs based on their needs.
- Smart contract risks :
By allowing modular risk management, Mellow reduces the risk of errors in smart contracts and shared security network logic, providing a safer environment for re-staking holders.
- Operator Centralization :
Mellow diversifies operator selection decisions, prevents centralization, and ensures a balanced and decentralized operator ecosystem.
- LRT Cycle Risks :
Mellow’s design addresses the risk of liquidity crunch due to withdrawal closures. Currently withdrawals take 24 hours. 
Interestingly, Mellow specifically mentioned that they could launch LRT on top of any staking protocol like Symbiotic, Eigenlayer, Karak, or Nektar. But I would be very surprised if Mellow worked directly with Eigenlayer.
However, I would not be surprised if the current Eigenlayer LRT protocol works with Symbiotic or Mellow. In fact, Coindesk reported that a source close to Renzo and Symbiotic mentioned that Renzo was already discussing integration with Symbiotic a month ago.
Finally, the beauty of permissionless Mellow vaults is that we could very well have LRT for DeFi tokens. Think of the ENA LRT token, which is liquid re-collateralized ENA on Symbiotic that secures the USDe bridge.
This cycle h
