What’s at Stake in DeFi’s Most-Hyped Sector

In this edition of the Bloomberg Crypto newsletter, Sidhartha Shukla describes what’s at stake in the fight over crypto restaking.

Crypto’s hottest innovation right now is arguably restaking, which amplifies the returns earned for securing a blockchain by allowing the digital tokens used in the process to fortify multiple applications at once.

The leader in this segment of decentralized finance is EigenLayer, which has amassed more than $14 billion in assets since launching a year ago and whose backers include big-name venture investor a16z crypto.

EigenLayer uses software — or smart contracts — to enable Ether tokens to be restaked and has almost became synonymous with the nascent sector, such is its success. But a competitor has now emerged in the form of Symbiotic, whose investors include venture capital outfit Paradigm as well as Cyber.Fund.

Symbiotic went live last month and attracted over $1 billion in assets in a few weeks, a tally EigenLayer took months to achieve, according to DefiLlama data. The protocol allows restaking for a slew of tokens compatible with the Ethereum blockchain, whereas EigenLayer is focused on Ether and some of its derivatives.