Media: Lido founders and investors secretly back EigenLayer competitor

What’s new? The co-founders of the leading liquid staking protocol Lido, Konstantin Lomashuk and Vasiliy Shapovalov, through their venture capital firm Cyber Fund, are secretly backing the Symbiotic project, which will enable restaking using the Lido staked ETH (stETH) token. According to CoinDesk’s sources, Symbiotic is also being backed by venture capital firm Paradigm, one of Lido’s largest investors.

CoinDesk’s material

What else is known? It has been noted that the emergence of a new player with major backers could portend a confrontation that could change the landscape of the decentralized finance (DeFi) sector. Symbiotic, still in development, is structured to be a competitor to the EigenLayer protocol, the leader of the restaking segment with a total value locked (TVL) of $14,442 billion.

Lido, EigenLayer, and similar protocols allow ETH already blocked in staking to be reused elsewhere without requiring unlocking the original coins. With restaking, users can earn more income: they simultaneously receive staking rewards while participating in maintaining the security of the Ethereum blockchain, and can use their assets in other decentralized applications (DApps).

Symbiotic is being developed by the team that previously created the staking service Stakemind. It is positioned as a publicly available protocol that “provides flexible mechanisms for decentralized networks to coordinate node operators and providers of economic security,” CoinDesk reports, citing internal documents. In addition to stETH, it will also allow the reuse of other staked-locked assets that are initially incompatible with EigenLayer.

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The teams of some EigenLayer-based restaking services said they have already discussed the possibility of integrating Symbiotic with its developers.

Lido was launched in December 2020 and offered an innovative approach to staking by issuing stETH coins to users in exchange for locked ETH that can be used in other revenue-generating protocols. It now holds a dominant position in the market and some experts have started to pay attention to the potential operational risks associated with it. Its TVL stands at $27,463 billion.

Lido’s market share has been falling recently as users move assets to the newer EigenLayer service launched last year. It allows the reuse of the native token ETH to secure other networks and reap the associated rewards. Symbiotic’s new project will work similarly to EigenLayer.

The key difference is that Symbiotic users will be able to directly transfer any assets of the popular ERC-20 standard into the protocol. This means that the protocol will be directly compatible with the Lido stETH token and thousands of other ERC-20-based assets. Meanwhile, EigenLayer only accepts ETH tokens.