A Comparative Analysis of Liquid Restaking Protocols
This article delves into a comparative analysis of restaking protocols such as EigenLayer, Symbiotic, and Karak, exploring implications for blockchain ecosystems.
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Staking is the process by which network participants stake their native tokens to support and secure blockchain networks that use PoS. Ethereum's transition from PoW to PoS introduced staking as a central mechanism ensuring decentralization and rewarding participants.
This article compares restaking protocols like EigenLayer, Symbiotic, and Karak, exploring their implications for the blockchain ecosystem. But first, let's explore staking, liquid staking, and restaking.
From Liquid Staking to Restaking: Enhancing Liquidity and Utility
Liquid Staking lets users stake ETH while retaining liquidity through derivative tokens (LST). Users earn rewards, engage in DeFi applications, or restake, enhancing capital utility. Restaking extends this, enabling staking ETH and LSTs to secure more protocols and gain additional rewards.
For example, users deposit ETH to Lido, receive stETH tokens, and deposit stETH to Aave for yield.
What is Liquid Restaking?
Liquid Restaking combines liquid staking and restaking. Liquid Restaking Tokens (LRT) represent staked assets usable across various DeFi protocols simultaneously, separating rewards from traditional staking limits, enhancing flexibility and efficiency.
Differences from Liquid Staking:
- Liquidity: Liquid staking maintains asset liquidity. Restaking lacks inherent liquidity unless rewards are tokenized.
- Asset Usage: Liquid staking enhances utility across multiple protocols. Restaking focuses on compounding within staking.
- Risk and Reward: Liquid staking offers higher rewards with trading risks. Restaking maximizes rewards simply.
- Flexibility: Liquid staking provides asset flexibility via tokenization. Restaking optimizes within protocols.
Comparative Analysis of Restaking Protocols
Comparing EigenLayer, Symbiotic, and Karak:
| Property | EigenLayer | Symbiotic | Karak |
|---|---|---|---|
| TVL | $18 Billion | $241 Million | $1 Billion |
| Asset Support | ETH & ETH Derivatives | Any ERC-20 Token | ETH, LST, Stablecoins, etc. |
| Restaking Options | Liquid, Native, LP Token Restaking | Flexible (vault-dependent) | Liquid Staking/Restaking, Stablecoins |
| Governance | DAO-based | Community | Token Holder |
| Security | Actively Validated Services | Shared Security Framework | Distributed Secure Services |
EigenLayer
EigenLayer pioneered Ethereum restaking, enhancing crypto-economic security and application support.
Architecture
Image source: EigenLayer Blog
- Staker: Stakes ETH/derivatives via Token Manager.
- Operator: Runs AVS software; manages tokens via Delegation Manager.
- AVS: Services built atop EigenLayer (e.g., Eigen DA).
- Slashing Manager: Defines slashing logic.
EigenLayer pools security, enabling developers to launch decentralized infrastructure securely and quickly.
Image source: EigenLayer Whitepaper
Benefits for Stakers
- Economic security via ETH/derivatives.
- Restaking options enhance resilience.
- Delegation to trusted operators.
Symbiotic
Symbiotic emphasizes shared security and flexibility.
Architecture
Image source: Symbiotic Docs
- Vaults: Users deposit ERC-20 tokens.
- Networks: Opt into vault strategies for decentralized infrastructure.
- Operators: Run infrastructure using staked assets.
- Resolvers: Oversee slashing, ensuring fairness.
Symbiotic’s modular architecture supports multiple networks, enabling innovative infrastructure designs.
Benefits for Stakers
- Flexible ERC-20 token staking.
- Multiple network restaking.
- Enhanced security via resolvers.
- Robust decentralized infrastructure.
Karak
Karak offers universal crypto-economic security through multi-asset restaking.
Architecture
Image source: Karak Docs
- Restakers: Deposit assets across protocols.
- Distributed Secure Services (DSS): Enhance security, validate operations.
- Operators: Validate transactions, maintain robustness.
Karak supports diverse asset restaking, promoting universal security across multiple blockchains.
Benefits for Stakers
- Multi-asset restaking (including stablecoins).
- Cross-blockchain flexibility.
- Enhanced security through additional slashing conditions.
- Stablecoin integration simplifies security forecasting.
Conclusion
Liquid restaking protocols are essential for blockchain adoption by improving liquidity and utility of staked assets. EigenLayer, Symbiotic, and Karak each offer unique benefits, enhancing the ecosystem for developers and stakers alike.