Blockdaemon partnered early with EigenLayer and Symbiotic to offer restaking opportunities for institutional customers and LRTs such as EtherFi.

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We have previously written and presented some specific considerations regarding institutional compliance and risks in restaking. In this article, we focus on the commonalities and differences between Symbiotic and EigenLayer, the two leading restaking protocols.

EigenLayer’s first mover advantage

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As the first mover in the Ethereum restaking category, EigenLayer boasts a much higher TVL than Symbiotic, which began accepting collateral about 6 months ago.

Image source: Blocklytics on Dune

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Even more importantly, EigenLayer has attracted over 100 teams to build on its platform. This increased demand in the coming months should translate into future rewards for collateral providers. In addition, the $EIGEN token will subsidize restaking incentives during the bootstrapping phase. As long as AVSs don’t need to pay rewards, the risks often outweigh the benefits of restaking for most institutions. Currently, points and token airdrops are the main source of rewards, and this will likely continue until organic usage of projects generates enough fees to pay for restaking security.

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How is Symbiotic different from EigenLayer?

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Symbiotic differentiated itself from EigenLayer by allowing different ERC-20 tokens, including wBTC, to be used as restaking collateral. EigenLayer has since adopted this option as well.

Symbiotic is expected to offer native ETH restaking similar to EigenLayer in the coming months through partner developments.

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Another key difference is Symbiotic’s Vault model. It requires a three-way opt-in among the restaker (providing specific types of collateral), the node operator (running the infrastructure) and the network (the project needing the security similar to AVSs on EigenLayer).

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Image source: Symbiotic docs - Vaults

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Symbiotic’s Vault setup accommodates different use cases. Institutions may choose to deploy their own Vaults for maximum control. Even without that, making these choices generally more explicit is important for institutions, since in the EigenLayer model, the node operator determines the secured AVS set. 

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Depending on how the Symbiotic ecosystem develops, these choices could become operationally cumbersome and impact capital efficiency. However, we already see the formation of abstractions on the EigenLayer side, including Liquid Restaking Tokens (LRTs), as well as standardizations, tooling and frameworks like Altlayer or Othenic for project builders.

The Symbiotic Vaults also enable more efficient infrastructure usage. Node operators need to run only one instance of a network for multiple customers without co-mingling funds. This efficiency reduces costs and allows for lower commission rates over time.

Image source: Symbiotic docs - Operators

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Institutional risk considerations

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Traditional institutions face an early hurdle: they need to put their customers’ assets into EigenLayer’s strategy smart contracts or Symbiotic Vaults, instead of keeping them secure in the hands of regulated custodians. EigenLayer’s contracts boast a higher Lindy effect due to their earlier launch, while Symbiotic emphasizes the immutability of its core contracts, eliminating governance risks. However, the Symbiotic team plans to launch their own token, so its role will be interesting to observe. 

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Symbiotic aims to launch their Mainnet in late November or December. It’;s important to note that neither protocol has released fully complete code yet. With unclear rewards, the risks are even more uncertain. Once the restaking protocols provide their slashing frameworks, each AVS/network will define how it handles misbehavior. Evaluating each individually, especially  potential correlation scenarios, will be tricky but vital for risk-reward considerations.

Image source: Ethresearch forum

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Conclusion

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As we have shown, restaking is still in its early days. Early adopters are mainly crypto-natives who restake via LRTs. The upcoming launch of Symbiotic, with its institutional-friendly architecture, already shows great progress. With competition approaching, EigenLayer will continue to iterate quickly, and capitalize on their first mover advantages. We expect to see thriving restaking ecosystems in 2025.

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And we’re here to help you navigate restaking!

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