Symbiotic: Scaling Shared Security Through Restaking - Misha Putiatin. Ep. 575

Symbiotic is a restaking protocol that aims to streamline and optimize the process of decentralization for blockchain networks. It tackles the high costs and complexities associated with traditional proof-of-stake models by allowing networks to leverage existing stable and liquid tokens for security, enabling quicker and more efficient launches and growth. The protocol introduces a shared security model where networks can utilize the security of other established blockchains and benefit from a broader range of validators and stakers, leading to increased flexibility and innovative economic structures.

Centralized Networks

• 00:00:00 Many networks begin with centralized structures due to the challenges and costs of decentralization, often using software validator sets or proof-of-authority models. The process of transitioning to full decentralization is complex and resource-intensive, requiring the establishment of a stable token and a substantial validator set. The centralization journey is unoptimized and can be suboptimal in terms of network performance and resource utilization.

Symbiotic's Goal

• 00:08:37 Symbiotic's primary objective is to simplify and enhance the efficiency of decentralization for blockchain networks. It aims to address the inherent suboptimality of decentralization by creating incentives and tools to make the transition process easier for new protocols. By doing so, symbiotic hopes to encourage protocols to embrace full-fledged decentralization immediately upon launch rather than adopting a gradual or centralized approach.

Restaking's Role

• 00:10:25 Restaking is a key component of Symbiotic's shared security model, allowing networks to leverage the security and liquidity of existing tokens like Ether or Bitcoin. Instead of relying solely on their native tokens for security, networks can outsource this responsibility to more established and reliable blockchains. This strategy reduces the cost and complexity associated with building a secure network from scratch and enables networks to scale more rapidly.

Challenges of Proof-of-Stake

• 00:17:11 Traditional proof-of-stake models, commonly observed in Cosmos and other blockchains, face challenges related to economic incentives and network security. The inflation-based reward systems can lead to uneven distributions of rewards among validators, potentially resulting in some validators running at a loss. Also, the use of a native token to incentivize validators can create sell pressure, which may negatively impact the token's value.

Symbiotic's Architecture

• 00:37:46 Symbiotic's architecture involves three key participants: stakers, operators, and networks. Stakers provide their stake to networks through operators. Networks rely on operators to provide economic security and achieve decentralization, receiving the necessary resources from stakers. The network serves as the primary participant, deciding whether to accept the proposed stake and operator set.

Liquid Restking Tokens (LRTs)

• 00:40:47 Liquid restaking tokens (LRTs) play a crucial role in Symbiotic's ecosystem, providing a simplified interface for stakers to participate in the shared security model. Stakers can deposit their assets into LRTs, which then manage the delegation and reward distribution to the chosen networks and operator sets. LRTs function as collective bargaining entities that negotiate the best terms on behalf of both stakers and operators.

Symbiotic's Deployment

• 00:45:25 Symbiotic's core functionality is primarily hosted on the Ethereum network, serving as a data availability and execution layer. However, the protocol is designed to be multi-chain compatible. Assets from other chains like Cosmos or Solana can be used in Symbiotic's shared security model without the need for immediate or rapid bridging. The core functionality can remain on Ethereum, while networks that choose to use it can deploy simple message passing smart contracts on their respective chains.

Slashing

• 01:00:00 Symbiotic offers flexibility in how slashing mechanisms are implemented, enabling network-specific configurations. Different slashing methods might be employed, such as algorithmic, subjective, or consensus-based. Resolvers act as veto committees to mitigate potential bugs and abuse in slashing events. Some networks might opt not to use slashing at all, using staking as a gatekeeping mechanism for participation and voting.