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The decentralized finance (DeFi) market has witnessed growth in recent months, with new protocols emerging and challenging established leaders. One of the most notable examples is Symbiotic, a liquid restaking protocol on the Ethereum network that is quickly gaining traction and positioning itself as a viable alternative to the renowned EigenLayer.

Restaking is a strategy that allows users to use liquid staked tokens (such as stETH) as collateral to borrow money on DeFi platforms, reinvesting those funds into more staking or exploring other investment opportunities. EigenLayer has been the leading protocol in this space, with a total value locked (TVL) of over $16 billion.

According to data from DeFi Llama, Symbiotic has seen impressive growth in its total value locked (TVL). At the beginning of June, Symbiotic’s TVL was $48 million, and at the time of publishing, it reached $1.025 billion. This significant increase reflects the growing demand for liquid staking solutions.

On July 3, Symbiotic announced that it had reached its deposit limit of 210,600 stETH, a synthetic asset representing Ether deposits on the Lido liquid staking platform, in just four hours. This milestone, which equates to approximately $800 million, highlights the popularity and investor confidence in the new protocol.

Restaking ecosystem

Symbiotic differentiates itself from EigenLayer by supporting a variety of ERC-20 tokens and specific derivatives. This allows users to diversify their portfolios and deposit tokens such as DAI, USDC, LINK, AAVE, and UNI, in addition to stETH, to generate additional yields. This flexibility attracts a broader and more diverse user base.

Additionally, Symbiotic leverages the robust security of the Ethereum network to protect deposited assets, ensuring a safe environment for investors.

Staking is a consensus mechanism that replaced traditional mining with the proof-of-stake protocol. Since 2022, it has been implemented on the Ethereum network, allowing users who wish to participate in validating transactions to deposit 32 ETH, receiving an annual yield of approximately 4%.

Liquid staking platforms like Lido aim to lower the barrier to entry for these investments by offering liquid staking tokens (stETH) as proof of ETH deposit. Users can use these tokens as collateral to borrow and reinvest. This increases potential returns above the 4% annual yield offered by traditional Ethereum staking.

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