Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Symbiotic: Scaling Shared Security Through Restaking - Misha Putiatin

Episode Date: November 26, 2024

Bootstrapping and maintaining a validator set can be a challenging endeavour, especially for projects that are in search of a product market fit. However, this does not mean one should abandon the ethos of decentralisation in favour of a more streamlined centralised approach. The notion of shared security had been previously explored in the Cosmos ecosystem, but Symbiotic takes it a step further, making it readily available for any project, regardless of its native blockchain, through restaking. Symbiotic is a modular coordination layer that sources node operators and economic security in a maximally capital-efficient manner.Topics covered in this episode:Misha’s backgroundSymbiotic’s origin storyHow Symbiotic tackles decentralisationThe role of restaking in proof-of-stake modelsThe economics of restakingThe architecture of SymbioticLiquid restaking tokens (LRT)Expanding restaking beyond EthereumSlashingSymbiotic smart contract immutability and future updatesEcosystem developmentEpisode links:Misha Putiatin on TwitterSymbiotic on TwitterSponsors:Gnosis: Gnosis builds decentralized infrastructure for the Ethereum ecosystem, since 2015. This year marks the launch of Gnosis Pay— the world's first Decentralized Payment Network. Get started today at - gnosis.ioChorus One: Chorus One is one of the largest node operators worldwide, supporting more than 100,000 delegators, across 45 networks. The recently launched OPUS allows staking up to 8,000 ETH in a single transaction. Enjoy the highest yields and institutional grade security at - chorus.oneThis episode is hosted by Brian Fabian Crain.

We identified the parts that a lot of protocols, a lot of networks are starting centralized because decentralization journey is so hard and it's so unoptimized or start with the really sub-far validator set and suffer for that. If you have like a million nodes, it's suboptimal. Decentralization is something that really expensive for people to maintain. It's really hard to operate. Our basic job was to create an alignment of incentives for new protocols. So when they decide to launch centralized or with proof of authority or white listing of operators,

they decide on full-fledged decentralization immediately. Welcome to Epstein, the show which talks about the technologies, projects and people driving decentralization and the blockchain revolution. I'm Brian Crane and today I'm speaking with Misha, who is the co-founder and CEO of Symbiotic. Symbolic is a restaking, staking protocol. all and yeah, it's a very interesting new paradigm. So I'm excited to speak with Misha about that. But just before we get into that,

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This episode is proudly brought to by NOSIS, a collective dedicated to advancing a decentralized future. NOSIS leads innovation with circles, NOSIS pay, and Metri, reshaping, open banking, and money. With Hashi and NOSIS VPN, they're building a more resilient privacy-focused internet. If you're looking for an L1 to launch your project, NOSIS chain offers the same development environment as Ethereum with lower transaction fees. It's supported by over 200,000 validators, making NOSIS chain a reliable and credibly neutral foundation for your applications. NOSISDAO drives NOSIS governance where every voice matters.

Join the NOSIS community in the NOSISDAO forum today. Deploy on the EVM-compatible NOSIS chain or secure the network with just one GNO and affordable hardware. Start your decentralization journey today at NOSIS.io. Cool. Thanks so much for taking the time, Misha. I'm really excited to speak with you. I think restaking is, you know, someone who's been working in staking for a long time is a very interesting new concept is an interesting kind of you know conceptual evolution of where staking may go same time it's like totally

at the beginning uh you guys had a lot of like very interesting ideas so i'm i'm excited to speak with you about that but maybe i'm curious maybe we can just like start with a little bit your background your journey like how did you get into crypto and what was your journey been Yeah, I was interested in crypto for a while, I think, since 2011 or something. In and out, I learned about this electronic money concept and was really impressed because what not to be impressed with the decentralized and unstoppable money. Everything else, I knew little about how the institutions and how regulations work because nobody knew that back then. It wasn't for like an average consumer to know

how like how people are like how banks are going to be like included or excluded from the SEPA were Swift networks. Like nobody knew about those networks before like you didn't if you didn't do like cross-border payments or something like that you were like basically going visa to visa payments. So yeah, it was a really interesting concept. Then, like I tried mining Bitcoin for for a few weeks or days, I think. But it's like you couldn't do anything with that, except like trade on mountain gocks or something like that. There were not no actual exchanges, just one, I think. There was no defy, there was nothing to actually do by speculate on one like asset pair. So, yeah, like I suppose I turned that off for a while and then returned when the I like

ICO and Ethereum started to take off. And that's where like the interesting part began because you are you can actually do something. You could, I don't know, invest into ICOs, you could support interesting protocols because like donations were like really huge back then before ICOs. People just wanted something to be built. And they had like a lot of mined Bitcoins or Ethereum. So you just like go to Bitcoin Talk Forum and just donate to people without expecting them to like do something for you.

Just to see where it goes. Ethereum was back then like it was like seven or like five bucks apiece. So people were like spreading it around and then it grew by like 100% and then like like 10, I don't know, like a thousand percent. And a lot of people there are building protocols realize that this is like an actual funding mechanism. What's the origin story of symbiotic? Well, we were working on state minds with Alguis.

We found it's my co-founder for symbiotic as well. We were working on state mind with the goal of making our part, like our industry. a bit bigger by like make it safer protecting people and trying to secure protocols networks like we helped blockchains as well as roll-ups secure their networks and as like big huge defy protocols and yeah we analyzed a bunch of stuff like how do we we had a team of around like 25 people with us working on securing every part of the industry so We analyzed, like, can we help secure compilers more?

So we helped Wiper, like, wrote a fuzzer for them and made, like, security assessments of that, found like, several bugs. Then we realized, like, there is a node code, right? We have multi-client for there, differential fuzzing, other tooling. So like, this is semi-covered. Okay, what can we do next? like we have our PC notes, our PC notes like secured by this, this and this.

And like we went through every, every part of the industry, like basically every interaction that user can have with blockchain, so like PBS and everything like that. And identified parts that that are needed to make our like development sustainable. Because for industry, sometimes takes like, I don't know,

like from $100 to $1,000 to get, are really like quality participant and then immediately like hundreds of thousands of them are gone because like there is some vulnerability or something wiped out from like the the productive part of our crowd so at some point we realized like to make it to make it sustainable like we identified the parts that a lot of protocols a lot of networks are starting centralized because the centralization journey is so hard and it's so unoptimized or start with the really subfire validator set and suffer for that.

And we decided, yeah, it's a good time to start like the protocol that optimizes for that. And that's how we started working on symbiotic. Okay, so you said the protocol that optimizes for that, maybe, yeah, describe like what is a problem that symbiotic is trying to solve? Okay, yeah. Basically, the symbiotic is trying to solve decentralization. Decentralization is like it's suboptimal. Everybody knows that.

Redundancy is like a step from outside of optimum. The optimal setup is you have one server that's controlled by you, that's deployed in one place or like with the few backups. If you have like a million nodes, it's suboptimal. Decentralization is something that's really expensive for people to maintain. It's really hard to operate. And yeah, like our basic job was to create an alignment of incentives.

And Uyx as well, like supporting tools and general support system. To make this journey easier, to make this journey way more easier. way easier to digest for new protocols. So when they decide to launch centralized or with proof of authority or like with white listing of operators, they decide on full-fledged decentralization immediately. Not a hard task because, again, it's physics. Decentralization is by definition suboptimal.

But I think we are on the right, path to make it so that it's way easier and way more, well, way more efficient for networks to use outside. Okay, so you want to make decentralization easier and more efficient. I think most people think of symbiolic as like restaking protocol. What's the common, what's the connection between, you know, decentralization? and making decentralization easy and restaking. Yeah. Okay, like, again, the decentralization is suboptimal.

You need to pay a lot of people, a lot of money to operate your network. Otherwise, you can just pay yourself or not pay at all, get one server and operate your network if it's fully centralized. It's not going to be a network, but like pay one mode to operate your network. So the journey of decentralization is quite expensive and it's quite hard. So you need to have like with the current proof of stake models, you need to have something to stake first, right? Like you need to launch your own token.

For this token you need to create like some legal basis because you need that for you not to get sued after that. You need to have a legal basis, you need to spread it around with a lot of participants. Then you need to create enough liquidity for the token price to be semi-stable. You need to list it on multiple exchanges, and then you can decentralize. So you need to create a lot of things and you need to go through a lot of things and you need to go through a lot of things. long journey before you even think about decentralization. And then you need to find yourself an operator set.

When you find yourself an operator set, you need to talk to each company separately. And that's when you actually can start testing traction. And if you say like your token, say like around 100 mil, it is general consensus total circuleatium supply. In general consensus, you can't onboard. or 10 billion USD in Tether immediately. Because you don't have the security base to support the circulating supply of tokens

on your ecosystem, like in your ecosystem. Or you can't secure if you're like Oracle network, you can't secure 10, 10, 100 bill of TVL in other Defi protocols with your price fit. So what restaking does is that it helps you, like as a part of shared security, which we are like we are shared security protocol. So one of the

primitives that we use is restaking. What it does, it enables you to get a wide economic base from the tokens that are actually stable, that have really good liquidity, that are listed everywhere, and immediately start testing your traction. Before all of these steps that I described, before this six to 16 months of development, and like trying to create enough of the stable economic base,

enough of the really good validation, set and like the mechanics of your tokenomics and everything like that, you can start immediately. And you can on board a lot of money and really good operators immediately almost. This is the goal at least for shared security protocols. And like, again, it plays to the same narrative. You can do better while being suboptimal. So you can get enough enough UX improved. enough go-to-market improvement and now enough capital efficiency to counteract and even like

receive a lot of a lot of benefits while being redundant and while being decentralized from the start one point you're making right is that basically if you're launching a proof for stake network right it's expensive there's a whole bunch of overhead coordination finding operators set etc in the restaking case So if now a protocol goes to symbiotic and they say, okay, I want to launch some chain and I want an operator set and I want to have some economic security, then generally they'll still use their native token because they still need to provide some kind of incentive for this.

They can use points or other mechanisms for that. It's not there might be, like the optimization here might be achieved through V mechanics, a lockup period, dual staking, basket staking, a lot of other, like,

fee model, straight up fee model for some networks that would never need their token at all. We're exploring these mechanisms as well. This is like a really, really bullish concept,

but for most, like, for totality of networks. But, yeah, there are a lot of novel mechanisms that are not going to be like they were not available at all before. You can shorten your journey by a lot,

just not like launching your token immediately or launching it in like some limited capacity while already testing traction of your product market feed with like a huge economic base. So one big benefit, right, that I can totally see is that, you know, you're making things a lot more flexible, right? Because so far, let's say, actually proof of stake has been pretty pretty uniform in a lot of ways right there's some variation right like for example some protocols say oh the validators have to hold some self-warned in their wallet and others can can be delegated you know so there's some difference there like let's say tasel or a few others but you know mostly it's really the kind of cosmol staking model i think has been the most common

where you know you have some people running validators then people delegate to the validators the validators charge some kind of commission and then the voting power on the chain of all the validators is determined by the amount that's being staked and then you know the protocol basically inflates the supply and it pays it to the people staking so that's like really like the standard model that i think has been copied over and over again what do you think are the problems with this, like from an economic and incentive perspective? Yeah. Well, like you were mentioned, you were mainly mentioned in chains. It's really important for people to understand that like we have oracles as well. We have threshold networks

that are like operating on completely different mechanisms. We have pre-conformer network, fast finality networks, other like networks that are not chain. They're still secured by stake and economic security, but they're not blockchains. They don't operate on the same principle. Every decentralized chain can use, not the chain, every decentralized network, that's why we call them networks, can benefit from economic security if they have like some ability for validators to misbehave or operators to misbehave.

So like slashing mechanism versus the reward mechanism. In terms of optimization, straight up optimization, yeah, like you can start immediately. Like go-to-market optimization of six months is going to be a huge value proposition for a lot of people. And Cosmos SLCA that you mentioned, the Cosmos chains that you mentioned,

they, even with the like incentives, how they are to develop for Cosmos ecosystem, they reached a lot of, they reached a lot of actual use cases and a lot of teams that are building on this tech stack because they have an UX optimization that we are trying to achieve as well. Just imagine if you have like registry

that can be reused multiple times. Network middleware, trust roots on Ethereum that can be reused multiple times. People launching with like with the same primitive or close primitive networks that are operate with the same like tokenomics or with the same reward or like slashing model.

They can reuse code each time they do launch. So it's not like one-to-one journey. And like that's what brought a lot of people to cosmos because their system can be reused. We are building that but in more generalized way. So it like will encompass every decentralized network and bring optimization that is reached for restaking so you don't have to pay your validator that much

or your operator that much because you have less money to pay a PY for less amount of money yeah and like while getting go to market and like pure timing optimization so I feel this is actually a very

interesting aspect of like the economics of restaking and like one way so if you take like a typical Cosmos Network, right? So let's say typical proof of stake chain. Those really matter. So let's say it has a market cap of 100

million and now it has inflation of 7%. So let's say it pays 7 million a year to the stakers. But then of course, most of this is just people who hold the native token.

They get more of the native tokens. So they're like, oh, I'm happy. I have more tokens, right? I just you know, accumulate more tokens. And then you have something that is going to the validators who are actually doing the work of like running the chain. So let's say that is like, let's say it's like 7% on average. So now in such a chain, right, let's say in this example, you'd have like half a million per year, which is actually paid to the validators running the chain. The rest goes to back to the token holders. I mean, I see what one downside I see in this is that

maybe the payments to the validers are very uneven, right? Some make a lot because they have big stake. A lot of them might be running at a loss. But if you compare to restaking, right, if now I have my native token and I pay it to, you know, Ethereum holders or Bitcoin holders or, you know, somebody else who has some other asset and they just want to have more yield on their other asset, then you have to assume that in most cases they're just going to sell the token, right? And it's just like going to lead to sale pressure for this asset. So I'm curious how you think about that and like how you sort of deal with the, yeah, this aspect of, you know, the more you pay in rewards.

the more cell pressure it creates in the restaking scenario. Yeah. In actuality, the highest amount of pressure that you can experience is when you're paying for the stake in your own tokens, when you launch natively. Because just imagine, you have, first, you're launching your own token. So, like, you usually your annual API,

is a bit higher than like for the classical assets because you need to like there is more risk involved so like if for Ethereum is like 3.5% new networks usually pay up to like well 15 10% in some cases like so i would take like 10% as a as a metric uh so you pay 10% uh for the the amount of like the for the 100 meal that you uh you have. You can't abort a lot of money. You can't generate a lot of fees. You can't bring big protocols because you're limited by the amount of like your market cap. So it's going to be slow growth for you. Like if you're not viral immediately, it will take you a couple of years to get on board enough protocols, enough networks, like boost your market cap that like you can

actually onboard them. So like at least for like one bill or two bill. And it's like, you're going to be paying 10% on your tokens each time, so you're going to be diluting your tokens. Let's take the case of using risk-taking. First, you can use mechanisms of V tokens, points or other mechanisms to postpone the actual cell pressure on your tokens by months or like year, if you have really good user base that understands that.

So no pressure at all in this optimization. You can use dual staking for the optimization of like and motivate people to stake your native tokens to get this proportional amount of rewards to say Ethereum stakers. You can use other like million mechanics for that. But let's let's imagine you don't like you don't you're not clever at all. You're not going to be using any of those. Okay. Like for Ethereum stakers. you can create, like you can use same if token, like, say, around five times, right? This is like the threshold that we are looking at right now. Five times. So each network for you to get the same amount of APR can, like, can provide APR, say,

like three times as low. So you only need to pay 3% for the amount of stake that you receive. But you can start with a couple of billions in Ethereum. If your system requires that if it's an Oracle system that's going to be like you already have like a good BD connections to say other or other protocols for them to use your price fit. And you immediately start with like your system secured by two bill. Yeah, you're going to be paying for like 3% for that in your token. But again, there are a lot of optimizations for that to counter the price pressure or eliminate it altogether. And you test your product market fit on scale immediately while being safer than you would ever like be. So even without optimization, yeah, like restaking will just divide

like by the order of like by the restaking ratio, divide the amount of like sale pressure you are going to be experienced. I actually don't. I really don't agree with this. Like, let's take the example, right? You have a company and the company has shares and now you do a stock split and now instead of one share, everyone has two shares.

Like, did you really change anything? Not really, right? It's just everyone has twice as many shares. They're worth half as much. The market cap of the company is the same. Like, I think staking, like, on a very simple level, if you have, if you pay staking more, it's in your native token,

two people already holding your native tokens, it's just kind of like a stock split. It's sort of like, now, there's a little caveat there, right? Which is that some people are probably going to need to pay taxes on their staking rewards and then they will have to sell some of it. I think that is a factor. But still, like, you're, you know, for the most part, you're paying more rewards.

It doesn't mean you have, it's not an actual cost. you're paying it to your token holders anyway. You're paying to a portion of your token holders that's like started. You're splitting the stocks for like less than half of your state, less than half of your people. Yeah, you do you do have some redistributive effect. That's true, right? Where you basically redistributing ownership from those not staking to those staking, which you know, uh, you can think about whether you want that or not. It may not be bad, right? Because like, who are the people who are not going to be staking? It may be short-term holders, market makers, traders, things like that.

People that are using this in Defi say, people who are actually using token tool, and you need all of those. Like I wouldn't value one more than the other. You don't want to proportion of more than half of your tokens to be staked ever. We had the systems that were designed specifically not to us. allow for that. Ethereum is trying to counter that at all costs because that's that's how you get that dead blockchains. No, like the stake amount first, yeah, like let's let's let's get like argument by argument. So it's not a stock split because like only a portion of your shareholders

are splitting their tokens. Okay, sure. It's different in this regard, like buy a lot. Then, like The actual mode of transport there is like validators and stakers sell their tokens all the time. Not because of taxes, but because they want to hedge the risks. And they need capital. Like, no, like we have analytics for that. Like it's pretty well researched. And yeah, here, and it's like it's really, like once you launch and once you actually have stakers,

The mechanics of rewards is kind of hard to update. For networks, like for networks launching with risk taking, it's a bit more flexible because they have an economic security base that is outside of their own token immediately. They experiment without people actually ever risking their money, because they have like Ethereum to rely on, for at least for bootstrapping phase. face. And then they can stimulate the same behavior, but with lockup periods and like a lot of other mechanisms that are going to be doing the same thing that you just mentioned, but doing

them on the algorithmic level. Not on like, oh, believe in our operators and validators, they're not going to be selling or stakers. They will. Like that's all they do. well except for like polka dot ones because most of them were like non-existent at the time they're like that accounts that accounts don't sell other than that yeah like you you you can create systems that are way more sustainable that what we have right now because like there there's going to be like mechanisms that are will reward the behavior that you've talked about and this actually will become like less of a payment yeah I definitely agree that like the flexibility here is very appealing right where you can like experiment with a lot of different

now i i think my other thing here where i also have a bit of a i disagree to some extent with one of the key narratives around restaking and you also like mention it you're like okay some chain launches and you know they only have like a hundred million market cap and you know, that's somehow a problem. And if he say like, oh, now you have like $2 billion, that's sort of securing this chain, it makes like a material difference. I think in like, you know, in the history of proof of stake,

right, we've had tons and tons of proof of stake network launched. I'm not aware of a single proof of stake network that, you know, failed because, you know, the economic security wasn't high enough. and then it got, you know, attacked or something like that. And, you know, you made the example of oracles, right? Now, okay, you may have an Oracle that's now securing a lot of value. But, I mean, if you take the biggest Oracle, chain link,

I mean, chain link for the longest time, even though the chain link token had a huge market cap, it didn't actually secure any of the Oracle feeds, right? it was basically a POA system. Or, you know, to give another example, you know, there's like noble chain in cosmos issuing USC. Again, there's not even a token there. There's actually zero economic value.

It's like a proof of authority chain as well. So I think even in those systems where you do have like, you know, some very high amounts of value at risk, you know, If Chainleikna said, okay, it's 10 billions of dollars is securing these oracles, does it really make a difference to people who really care? So I feel like the degree, the number of cases where having like more economic security, that's like securing a system, being like a major driver of success, I think is extremely small. Yeah, it's not a driver of success.

success. It's a driver of like first it's a perception driver and then like the examples that you mentioned are yeah like chain link where it was operating under true authority for a long time. It's a first mover advantage. Now we have networks that are like actually fixing a lot of those because proof authority requires being permissioned and being permissioned requires decision making for every network, for every price fit, because you're the one who is making that decision. That's why, like, new newcomers are, like, eating the cake of chain link in a lot of ways. Because on actual economic security, their permissionless systems can be built. So we have, like, other optimization.

Proof authority is not only bad because, like, it's unsafe, which that is. and prove authority and small validator sets that are controlled by networks, they're not, like, they're not, they're not, they have, like, examples where they stole people's money. Like, I remember a few of those. I just need to remember names. There were, like, really small networks

that tracked their users with the small operator set that was controlled by them. The biggest example of centralization of operators is your, you also, It was like a long, long time ago. EOS. Yeah, yeah, yeah. Yeah, so like they had like operator said that was really small

and they were attacked by it multiple times. We had examples of that, and industry learned their lesson. Now like small cap, low footprint networks, they're not getting traction, not because, like they're not getting hacked. They just get per percent. get perception of not being safe enough. And for Oracle networks, yeah, that's why ChainLink were, like, the perception that it was safe helped them to be market leader for a really long time.

And now this perception can be counteracted by the actual economic model. So newcomers were really having a really hard time competing with ChainLink because of the perception and really good track track. And this is like the flexibility and optimization and go to market. This really jumps as like innovation speed booster. Markets that were like gate kept by a reputation for a long time, as well as like the operator markets, as a close, a semi-closed club, they can be unlocked with risk-taking because you can get the same economic security

and the same, like, you don't have to have the same repeat. but you can have the same economic security, actual economic security as the bigger networks immediately. And I think like this is really powerful. And yeah, like, but those are like the Oracle network and POS chain. They are that they're not like the flagship cases. They're really like I hope I explained a bit like why does, why does, why is this important? not only from the like pure security perspective, but from the traction testing and flexibility perspective. But let's say like you have, say, pre-confirmations or anything that works with the like hundreds

or hundreds, thousands or like millions of proposers, be it pre-confirmations, be it in mev relays, be it something else. If you need a huge operator sets to be secured by some, like by some tokens, If you just have staking, you need to, like, for them to be secured, I don't know, like, by hundreds of billions of dollars, like the same as they use for their, like, part of the stake that they're going to be using for their actual proof of stake operations.

And with this staking, you can be, like, secured, like, 100,000 proposers can be secured by, like, one Ethereum or, like, 10 Ethereum. And that's going to be it. like we are still seeing the restaking cases emerging, but even like the worst case scenario proof of stake network, I like I explained how it can be like optimized a lot as well. Yeah, yeah. Well, I would say let's talk a little bit about the architecture of symbiotic.

Like what does this system actually look like? And what are the different components and and action? in the system? Yeah. Well, it has like basically three participants. First is stakers that give their stake to networks through operators, operators, networks and stakers. Networks require economic security to launch and decentralized their network.

They are receiving that from stakers through operators with their operators with their operator set. And if network is okay, like network is the arguably the most important participant, if it's okay with the amount of stake that they receive and the amount, like the validator set that is attached to that, they opt in and they start to be operated by those operators through this take. If any of the operators violate some rules of the network, network can slash them. If they don't, network can reward them. The role of restaking protocol or shared security protocol in our case is to make sure that

once the commitments are made, that this is the mode of work between those three. That commitments are, like commitments are followed. Okay, so you have stakers, operators, you have the networks. So let's talk through this from the perspective maybe of the stakers and the operators. So if I'm somebody who wants to now stake and I want to earn additional rewards, maybe I have some other interests, like I don't know, maybe I find some of the projects interesting, the building on symbiotics or something like that.

Like what is the flow here? The staker will then choose some network. to restake to and then, for example, choose maybe some operator that they trust or how would the state, what does the staker experience look like? Yeah. Well, most of this, this experience will go through LRTs. But if like say an example that like the staker wants to to manage everything themselves, they will create a vote, a vote. The vault will have, uh, the vote will have, uh, like lockup period that corresponds to the networks that they want to, wants to stake to. It will have its own or like separate resolver. That's basically the safeguard against unlawful slashing.

And through this resolver, like it will select the operator set that it wants to delegate to, and the network it wants to opt in with this evaluator set. And once this request, is made, network can agree and select this stake to be operated. Okay, so you mentioned a lot of it. Stake would go through LRTs, LRT is being like liquid restaking tokens. For those who follow the eigenlayer, you know, you've had that there like Etheri, Renzo and stuff, getting a lot of traction. How do you imagine LROTs will work?

And does this mean basically as a stake, I want to benefit from, you know, I would restake some assets. I want to use symbiotic. I would then just basically, for example, take my EF and deposit it in an LRT and I get some sort of, I don't know, Rens or Swell, EIFI something LIT token. And then on the back end, what happens? On the back end, though, this take through the vault of LRTs is going to be, be deposited into Volt-on symbiotic side, and it's going to be delegated to network

throughout the operator set by the LRT management team. Yeah, and like we already have like around 12, 12 RTs. So like this is how it's like this is not an unvalidated concept. We already receive most of our stake through LRTs because it's just like maybe more optimal that way for most users. So and then the LRGs will basically, they would then decide, okay, which of these networks do we want to secure? They would then say, and they would have some existing operator set. Let's say they have like 10 operators or something.

And then they would say, okay, now we go to network A and we say, okay, we bring our 10 operators. we bring $500 million worth of economic security and basically negotiate some kind of compensation for that. And the network will receive several requests for that

from different LRTs and we'll select the basket of LRTs their own users or like the yeah the sum proportion of it So say like five LRTs, 250, 550,000, 2,000, 3,000 users for outside of LRT. And this is going to be the set of stakers from the beginning of the network to be changed later. Right.

So I think what is interesting is that LOTs kind of become this also collective like bargaining organization, you know, where they would like negotiate sort of on behalf of both the stakers and the validators or the operators. Yeah, their job is going to be to fight for the most optimal stake allocation.

Yeah. I expect a lot of optimizations to come from LRT fights once they actually start. Yeah, because they are obviously also going to be in a very serious competition.

Yeah, of course, like there is limited amount of networks at least from the beginning and there's going to be not a lot of rewards for them, probably from the beginning as well. So like all artists will have to fight and choose and try to be onboarded into as many good networks as possible. Because other than that, they're the only ones like spreading their token around and there is no like inherent reward beneath them at the base layer. And then you guys also have some plans, is my understanding too. Because right now, basically, symbiotic is a set of smart contracts on Ethereum. Of course, today's staking happens all over the place in many different ecosystems and networks. How do you imagine that in many cases, Ethereum remains as this kind of, of place where some of this coordination happens of like stake and operators and LRTs, or do you

imagine that, you know, this will be kind of expanded to different networks? Yeah, symbiotic is on every network already. Like, this is by design. The fact that our trust route is based on Ethereum and we use like Ethereum as like data availability in execution layer. it doesn't mean that much. Like, we can, Symbiotic is designed in a way that we can use, like, tokens or on, like, almost any chain.

And, like, we don't have to transport them to Ethereum even. The assets on, like, Cosmos, the chains, the assets on, like, on Salana or, like, almost any place else can be used. This is the unique feature of restaking and shared security, at least as how we designed it. The fact that you don't need immediate bridging or fast, rapid bridging, you just need to asynchronously slash something and make sure that something is still present in the escrow or some deposit contract on other chains. It enables you to use assets that are outside of Ethereum easily.

And that's how we designed. We have this collateral abstraction on dogs. It's like a bit of a technical concept. But basically like a lot of other outside ecosystems are building on us. Yeah, the registry is going to be stored on Ethereum. But like everything else in terms of ecosystem, in terms of LRT, in terms of reward management and slashing, can be done on their ecosystem without like any vampire attack from Ethereum or something like that. So as current thinking goes, we'll see about the future,

but there is no, like, actual need for symbiotic to be deployed anywhere else. We just lose, like, some networks effect. So, like, let's say if you say, like, okay, some Solana-related thing would use symbiotic, you guys would not need to deploy some kind of smart contracts on Solana. Yeah, we'll, then the, the, And the supply side for the liquidity will need to have some escrow contract or a deposit contract that burner contract that needs to be like unwrap and burn if the message is received from the from the Ethereum side.

But no, like the core of symbiotic can stay on Ethereum and it's like it does need to be deployed. As soon as you want to use some like some collateral from up. other chains, you just deploy the simplest of messaging layers when contract, and you're good to go. If you want to get have rewards on Salana as well, you'll need to deploy a salana contract of rewards. But the registry is going to be taken from Ethereum. Because like actually you don't need, like there are, there aren't a lot of requirements

to the base layer for the restaking. It doesn't have to be fast in terms of finality. It doesn't have to be cheap. It just needs to be like as have as much of network effect as possible. And to be like as efficient of orchestration layer as possible. And Ethereum is that. That's why we designed symbiotic to work on Ethereum, L1. But in actuality, especially if you have canonical bridge or something or IBC, you can use

it anywhere else. You don't need to deploy symbiotic to every ecosystem. Like, it's already there, basically. What about slashing? How do you imagine slashing to work? Well, it's going to be different for every asset, at least. Like, we're just exploring this part of the wood slashing. Yeah, like, it's the main part about it is that it's going to be determined by networks. First of all, like, this is the important part. You don't have to, There is no one side fits all. For some networks, like, will, there's going to be like algorithmic slashing. For some reasons, for some networks, there are going to be subjective slashing

because you can't verify the actual act of misbehavior. For other, there can be consensus slashing. The fact, we designed it really flexible manner, so, like, network can deploy that in any way that they want. The tricky part for that was like how do we make it safer? And that's why we designed the resolvers that are going to be like really important at least for the beginning to be to help mitigate some bug related or like abuse related slashings. Resolvers are going to be veto committee that are going to be standing between the network messaging of slashing and the actual stake. They can be like again really flexible, algorithmic ones, proof based ones.

So this also chosen by the network? The resolvers are chosen by both, like they are chosen by the pair of stakers and network. They both agree on that the resolvers that are going to be connected through. They can be different, they can be like tiered in terms of like how they work. There are different configurations. From the start, just to, like, safely innovate in this category of protocols, I think there's going to be a committee risk takings mostly. And then most of them, like, will go resolver less and, like, probably, like,

or go into route of, like, proof, you know, Ziki proofs or fraud proofs. but that remains to be seen yes i'm actually also curious if you think slashing is important i mean if we look at the you know the history of proof of stake right first of all if you look at in the amount of money that has been uh sort of slashed it's very very very tiny you also had the case that actually for example when Cosmos launched. Cosmos today has like so Atom, Cosmos Hub has 5% slashing. So 5% of the

state tokens can be slashed. Actually I remember when Cosmos launched the idea was, oh, we're going to launch like that because it's, you know, beta, it's new, but then later we will increase. But of course, it never increased and honestly nobody ever

pushed for it to be increased. When Solana launched, they were also, oh, it's beta, it's new. So we are going to launch without slashing. And I told me actually at the time was talking about, oh, maybe we're going to have 100% slashing later. And if you double signing it. But today, Solana, many years later,

it's become very, very successful, a very big proof of state network, and it doesn't have any slashing. Avalanche doesn't have slashing, right? So do you think slashing is important? Do you imagine that, like, there would be regular slashing events or do you imagine like

do you think there also might be in a lot of chains or chains or decentralized systems that symbiotic that are using symbiotic that don't use slashing at all? Yeah, I expect some category of networks to not have slashing at all. For them, stake is going to be just gatekeeping like mechanism and voting mechanism.

You get enough reputation for people to vote for your network because the money are still limited for the supply. And you get to gatekeep the operator set. Like basically the delegation without slashing. For some networks it works. In case of Salana, by the way, it's the only major blockchain that was not available for days on end. So I think that no slashing grew backfired for them.

multiple times and I'm like I'm sure that we'll see more fun news from them as well in the future well I don't know if there has a lot to do with the slashing though this alone or downtown I think that's different like if actual people will was were slashed I think they would take this outage more seriously yeah yeah but yeah for some network slashing is inevitable like if it's straight up we we have like multiple uh threshold net networks securing a lot of stake and a lot of like wallets that are really like high volume. For Oracle network slashing might be like really essential if their oracles are like option-based or like calculation-based. And for some networks, even Zika co-processor networks, UEX slashing is going to be really important.

Because if they don't perform within a, within some small window, they might deliver a lot of lot of like a lot of harm to users. For a tester network, this might be really important because like what's stopping you from like issuing attestation that like you receive transaction and transactions finalized when you actually don't have that and like the like exchanges are going to get hurt or some people are going to get hurt in process or like arbiters are going to be hurt. Yeah, for a pre-confirmation, it's obviously a big deal because like people, if they don't have like the other leg, somewhere included in a block, they will lose a lot of money. So that they might be immediate harm.

For blockchains with modern consensus mechanisms, yeah, the harm is like limited a lot. So they might skip their leg day and disable or not enable the slashing call together. I think the shared security will help find this sweet spot because the difference is going to be quite noticeable. Just because the overall experience will be more streamlined. And you will have like two networks launching at the same time, one with slashing the other one without and see how it goes from both sides. So what about immutability of the symbiotic contracts? Is that something where you think they should be fixed, immutable?

Is there a role for governance there? Yeah, well, like, this was the hard part to actually design the system to be as flexible as it is, but still immutable at its core. Like it took us eight months to do that. Yeah, we did, as with everything else, the goal was for us to, to cater to as much possible network types and like business type types and talking types and participant types as possible and we just wanted to eliminate the government's risk for now yeah there is no way to upgrade the contracts because like we we don't want people ever being concerned with that this is

like within the same trope for us to reach optimization as with the highest with the highest rate of, like, with the highest success rate possible. And for that, yeah, like, there's no way for us to introduce peace first. And there is no way for us to upgrade the contracts. So, yeah, like, there is no, like, governance inside, at least for the core part of the contracts.

And then do you imagine, I mean, with Uniswap, it was kind of like that too, it was V2 and then B3. So do you also imagine there would be sort of later versions of symbiotic, like similar to like how Uniswap upgraded? Yeah, that might be one of the trope for us, one of the possible pathing. There might be others. Like the core, that depends on like how the actual market starts. If we were like amazingly diligent during this like eight months that we were like developing the architecture

and if we were so great that we designed the system to work with V1 forever and account for every possible use case, then yeah, sure, like V1 is going to be it for a while. But we have like that there are 100% going to be optimization in auxiliary systems and like, well, upgradeable parts, then the core is going to be just widely used by everyone forever. And the actual value add is going to be reached through auxiliary systems. If we identified, and this is probably closer to what will happen, if we identified, we haven't yet, like, full disclosure. For now, the core works ideally.

It works great. But when the industry starts and then matures, If we identify something, there's, of course, going to be like we identify value at that will warrant people migrating from V1 to V2, same as Uniswap. Of course, there's going to be an upgrade path for us. It just designed to be migrated as secure as possible. So people would actually need to opt in into every version. So currently, what are some of the things that people are building on symbiotic

that, you know, you're most excited about and you feel? like they're the best examples of how you want the system to be used? I don't pick and choose. This is the neutrality part. Like I love all of my children. But equally, but yeah, we have like almost everything. We were like out for, in the wild for around like three and a half months, I guess. And since then we got around 40 networks, 30-something, closer to 40 already, I think. Like couple of pre-confirmations, couple of data availability, 3 or 4 fast finality,

or two Oracle networks, one or two agent-based network for inference, Zika co-processors, a couple of thresholds, couple of, No, one, I think, fully homomorphic encryption network. Yeah, like basically everything. Roll kit for roll-ups on, even on Celestia. Like several TASI for substrate-based, like a roll-up deployment and network deployment. Like several SDKs. Yeah, we have basically every primitive in terms of decentralized networks, like already on us.

like building on us. Excited for all of them, but more excited for the ones that launched before 2025. This is the only metric that I can score people over. Like, are you going to be actually launching before the end of the year or like, or after? Because that each network that launches helps the others to see the light and to get the optimization. Because if you consider currently like there, there's zero. Zero Aveses or networks are actually launched. So if you're considering being launched centralized,

going through decentralization journey alone with like your team only, or launching with shared security, it's not an easy decision. But the more networks actually launch, even the Aveses, the more of like when they start launching, the more of them launch into full production, the more you'll have the menu,

that you can select from and get inspiration from and to actually like sway to sway you in the direction of shared security and that's what we want so you just mentioned timelines so what are what are the main milestones that are coming up for symbiotic yeah we're gonna launch main net soon getting toward that towards that for a while we just wait for networks to be ready

because we don't want any you want to rush in and it's going to be full production. So like every functionality available from our side. Yeah, like this is going to be a big one. And then, yeah, to scale up, orient teams better orient help validators to and operators to be as efficient as possible with this new paradigm. And yeah, like overall coordination work. We have multiple teams building resolvers teams building SDKs, teams building frameworks for networks to reuse. So, yeah, after mainland, like, we're currently getting to a point where the actual good questions are starting to be asked. Not the conceptual ones, but, like, actual UX questions.

Like, what's the lockup period that I need to use, like, to get the most alerties? What's the, I don't know, like, how do I approach validators? I don't want to talk to each one of them. Other consortiums of them, other groups of them I can reach out to. Like, I don't want to have like 12 chats. I want to have one. Is it possible for me get the best like validator set available for with just one chat? And like, we are getting to optimization part of it because like there are a lot of like concept work.

But in terms of like, do we need that at all? Like a lot of questions that people ask when they don't have an actual. problem to be solved immediately. For networks, it's like, it's applied, like, really applied. They just want them, like, okay, how do I get the best operator said that investors are getting off my back immediately? How do I get the stake amount so I can, like, launch protocols and tell them that I have enough support? How do I get the best, like, the, the tech stack that I can immediately reuse and, like, develop as little as possible? To get, the, the best, like, the, the, the tech stack that I can immediately reuse and like develop as little as possible to get to the product market feed that

I can actually like start testing. Cool. Excellent. Well, thank you so much, Misha. It's been, it's been really great to have you on. I'm excited. I think it's a I think it's, I think it's, I think Simaoli is going to give rise to a tremendous amount of like interesting experiments around staking around how to operate, how to launch, how to operate, how to operate, how to secure. decentralized systems and yeah I'm super thrilled to see like what's going to come out of that so thanks so much for coming on and thanks so much for yeah giving this update thank you yeah interesting questions thank you for that I'm super happy to be here and super happy to spread the mission and ideas