In our previous discussion on restaking, we explored the foundational concepts and the associated risk-reward dynamics. Since then, the restaking landscape has continued to evolve, presenting new opportunities and considerations for participants. With the recent launch of Symbiotic mainnet, this update aims to provide insights into recent developments and outline the networks we are currently engaging with in our restaking endeavors.

Advancements in Restaking

Restaking has rapidly gained traction within the decentralized finance (DeFi) ecosystem. Protocols such as Symbiotic have been at the forefront, enabling validators to extend their security guarantees to additional networks and services. This approach not only enhances the security of emerging projects but also allows stakers to earn additional rewards without committing extra capital.

We are now curating multiple vaults using Symbiotic, which restake various assets including wstETH and wBTC. These are allocated as shared security to a wide variety of networks.

Moreover, the introduction of liquid restaking tokens (LRTs) has further amplified the utility of (re)staked assets. These tokens can be utilized across various DeFi platforms, thereby increasing liquidity and potential yield opportunities for stakers. 

Currently, we curate two LRTs: Re7LRT and rstETH, which offer diversified restaking options built using Mellow’s LRT vault infrastructure. These represent some of the largest vaults on Symbiotic with over $80m in restaked TVL.

Our Restaking Strategy and Network Participation

In alignment with the start of Symbiotic mainnet, we have refined our restaking strategy to curate associated risks effectively. Symbiotic has gone live with the first slashing-enabled networks, meaning that allocating stake to networks and operators now comes with real considerations for risk and reward.

As outlined in our previous article, our approach involves a thorough evaluation of potential networks, focusing on factors such as security protocols, reward structures, and the impact of slashing mechanisms.

Slashing Dynamics on Symbiotic

With the Symbiotic mainnet launch, the platform now supports both networks with slashing and networks without slashing. This distinction plays a critical role in our risk-return calculations:

• Networks with Slashing introduce a higher risk profile, as stakers may incur penalties if network validators fail to meet performance standards or act maliciously. However, these networks may offer higher reward rates to compensate for the added risk.
• Networks without Slashing eliminate the risk of penalties, providing a more stable and predictable return profile. While the rewards may be comparatively lower, the reduced risk makes these networks attractive for conservative staking strategies.

As networks on Symbiotic progressively enable slashing mechanisms, we will continuously reassess and adjust our allocations to balance the evolving risk landscape with optimal reward opportunities.

Utilizing Stake Across Multiple Networks

One of the unique features of Symbiotic is the ability to use the same staked assets across multiple networks. This strategy can enhance yield by diversifying staking allocations and tapping into various reward mechanisms.

It is important to consider that re-using stake multiple times could also compound potential slashing risks. If a slashing event occurs in one network, it could impact the same staked assets committed elsewhere, amplifying potential losses.

That said, if the networks have uncorrelated slashing mechanisms—meaning that the conditions for slashing are independent across different networks—this strategy can improve the overall risk-return profile. By carefully selecting networks with distinct risk factors, it’s possible to optimize returns while mitigating compounded risks.

As networks evolve and slashing mechanisms become active, we are adapting our framework for cross-risk analysis, which has been successfully implemented in our DeFi operations, to drive our allocation strategies and ensure a balanced approach to risk and reward.

Preparing for a Changing Landscape

As the Symbiotic ecosystem evolves, staking dynamics across networks are expected to shift, especially as more networks enable slashing mechanisms. Within Symbiotic, any changes to slashing conditions must be explicitly agreed upon between stakers and networks, ensuring that participants are provided with full transparency and not exposed to unilaterally modified risks.

To navigate these changing dynamics, we are adopting a proactive approach in our strategy:

• Continuous Evaluation: We regularly assess the evolving slashing terms and network conditions. This includes reviewing network proposals and protocol updates that might impact slashing dynamics.
• Flexible Allocation Strategies: As networks update their staking mechanisms, especially those introducing or modifying slashing conditions, we will adjust our allocations accordingly. By dynamically shifting stake between networks based on their risk profiles, we can optimize for both security and rewards.
• Cross-Risk Analysis Integration: Leveraging our proven cross-risk analysis framework from DeFi operations, we ensure that compounded risks across multiple networks are carefully considered. This approach helps us to balance diversified opportunities with the inherent risks of restaking.

Through our expertise around vigilant monitoring and adaptive strategies, we maintain robust risk curation while capitalizing on the evolving opportunities within the restaking ecosystem.

Risk Curation Enhancements

Understanding the inherent risks in restaking, particularly concerning slashing penalties, we have multiple layers of due diligence and security protocols in place to safeguard our staked assets:

• Technical Due Diligence: Before engaging with any network or operator, we conduct comprehensive assessments of their technical frameworks, smart contracts, and operational teams to ensure reliability and security.
• Automated Safeguards: Utilizing mechanisms such as delegator hooks, we can automatically deallocate from a network in the event of slashing incidents, thereby limiting potential losses.
• Continuous Monitoring: Our in-house systems actively track on-chain events, including reward distributions and validator performance, enabling prompt responses to any anomalies.

A View of Current Symbiotic Networks

Symbiotic’s shared security model has opened up a range of innovative use cases for networks to leverage this infrastructure. From enhancing transaction preconfirmations and facilitating MEV capture to building decentralized keeper networks and ZK proof marketplaces, the applications are diverse and growing. These networks benefit from the robust security guarantees provided by restaked assets, allowing them to focus on delivering specialized functionalities while maintaining high levels of trust and resilience.

Below, we provide an overview of the current networks participating in the Symbiotic ecosystem, categorized by their slashing mechanisms and risk profiles.

Networks with Slashing

• mev-commit: Developed by Primev, mev-commit is a network that facilitates credible commitments for Ethereum pre-confirmations. Validators on Ethereum stake collateral to engage with the mev-commit protocol, earning additional proposer rewards as an incentive for their participation.
  • Slashing risk on mev-commit is limited to 1 ETH with numerous protections in place and no slashing in one year of validator operation, making this a low-risk and low-impact scenario.

Networks Live without Slashing

• Radius: Lighthouse by Radius serves as a bridge between rollups and searchers, facilitating efficient MEV (Maximal Extractable Value) opportunities.
• Cycle: Cycle Network develops chain abstraction tools, utilizing verifiable state aggregation and integrating the Omni State Channel Indexer (OSCI) with a decentralized sequencer to achieve trustworthy, cross-chain state validation.
• Ditto: Ditto Network taps into Symbiotic’s shared security framework to build a trustless, actively validated keeper network, capable of executing event-driven processes with robust economic assurances.
• Kalypso: Operating as a ZK (Zero-Knowledge) proof marketplace, Kalypso links applications and protocols needing ZK proofs with hardware providers that specialize in generating them.
• Bolt: Bolt enhances transaction speed by offering sub-second pre-confirmations through direct communication with Ethereum block proposers.
• Capx AI: Capx Network, leveraging Symbiotic’s infrastructure, optimizes the deployment of AI agents by efficiently matching them with necessary computational resources in real time.
• Human Network (Mishti): Human Network is a network for Human Keys, which are derived from human attributes. It lets users multiply their data encoded as elliptic curve points by a distributed private key.
• Symbiosis: Symbiosis is a cross-chain AMM DEX that pools together liquidity from different networks: L1s and L2s, EVM and non-EVM.

Networks in pre-deposit phase

• Hyperlane: Hyperlane is a permissionless interoperability protocol for cross-chain communication. The current pre-deposit phase is meant as an interim period between the Symbiotic launch and the Hyperlane DAO launch (expected mid-march).
• HyveDA: HyveDA is a modular data availability protocol designed for high-throughput performance, catering to the data-intense decentralized applications. It guarantees security through a fully decentralized Delegated Proof-of-Stake network powered by Symbiotic. It is expected to enable slashing around May 25 after the end of the pre-deposit phase.

Conclusion

The restaking ecosystem continues to evolve, and as always we will evolve our strategies to adapt. If you haven’t already, take a look at Re7 Labs’ restaking vaults or reach out with questions.