Paradigm and Lido Bet on Symbiotic to Challenge Eigenlayer’s Hold

Eigenlayer’s hold on the restaking space might soon face strong competition. A new project, Symbiotic, backed by heavyweights Lido—the largest DeFi protocol—and Paradigm, a leading cryptocurrency fund, is set to shake things up.

Documents obtained by Coindesk reveal that Symbiotic plans to offer staking services similar to those of Eigenlayer. However, a key difference sets Symbiotic apart: it will accept any asset based on Ethereum’s ERC-20 token standard. This compatibility extends to Lido’s staked ETH (stETH) token and thousands of other ERC-20 tokens, whereas Eigenlayer only supports ETH.

Symbiotic is already in discussions with Eigenlayer’s liquid restaking service, exploring potential integration once the project launches.

Since its launch, Eigenlayer has quickly risen in the DeFi space, amassing an impressive Total Value Locked (TVL) of over $16 billion. The project has recently announced the details of its airdrop, sparking significant interest from both investors and the crypto community.

This meteoric growth has not gone unnoticed by Lido, which leads the DeFi sector with a TVL of $27 billion but operates in an adjacent staking market. Lido has been losing market share recently, with its TVL on the decline. Many attribute this to Eigenlayer’s growing success and its higher yield offerings. 

It is no surprise then, that Lido has decided to back a competitor. The project aims to secure its market share and tap into this exciting new market, which could offer even more opportunities.

Another twist in the story involves Paradigm, which also tried to fund Eigenlayer. However, Eigenlayer’s founder turned down Paradigm’s offer in favor of A16z. In response, Paradigm committed to supporting a competitor.

Notably, Symbiotic is not the only project eyeing a slice of Eigenlayer’s market. In April, another staking protocol, Karak announced a $48 million Series A funding round, bringing its valuation to over $1 billion. This round saw investments from industry giants like Coinbase and Digital Currency Group, as well as Mubadala Capital, a $280 billion sovereign wealth fund in Abu Dhabi.

Unlike Eigenlayer, which focuses exclusively on Ethereum, Karak offers a restaking platform for a variety of assets, including ETH, Solana, and various Layer 2 tokens. Since April, Karak has accumulated a TVL of around $500 million, boosted by the promise of a token airdrop.

The restaking landscape is heating up, with new contenders like Symbiotic and Karak challenging established leaders. It is shaping up to be a fascinating battle to watch, and we continue to Observe.