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 software validator set and software 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 they when they
decide to launch centralized or with proof of authority or
whitelisting of operators, they decide on full-fledged
decentralization immediately. Welcome to App Center, 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. Symbiotic is a re staking
staking protocol 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, really briefly like to
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Cool. Thanks so much for taking the
time, Misha. I'm really excited to speak with
you. I think re staking is, you know,
as someone who's been working staking for a long time, it's a
very interesting new concept. It's an interesting kind of, you
know, conceptual evolution of where staking may go same time.
It's like totally at the beginning 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 like, I was interested interested in crypto for a
while, I think since 2011 or something in and out.
I, I learned about this electronic money concept and was
really impressed because like what, what, what not to be
impressed with the decentralized and unstoppable money.
Everything else. I, I, I knew little about like
how the institutions and how regulations work because nobody
knew that back then. Like it, it wasn't for like the
average consumer to know how like how people are, like how
banks are going to be like included or excluded from the
SEPA where SWIFT networks, like nobody knew about those networks
before. Like you, 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, like it was a really interesting concept.
Then like I tried mining Bitcoin for for a few like weeks or
days, I think, but it's like you couldn't do anything with that
except like trade on mountain gogs or something like that.
There were not no actual exchanges.
This one, I think there there was no defy.
There was nothing to actually do by but speculate on one like
asset pair. So, yeah, like I, I, 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, you can actually do something.
You could, I don't know, invest into ICU, like IC OS, you could
support interesting protocols because like donations were like
really huge back back then before IC OS, people just wanted
something to be built and they had like a lot of mined bitcoins
or Ethereums. 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 where it, where
it goes. Ethereum was back down like it
was like 7 or like 5-5 bucks a piece.
So people were like spreading it around and then it grew by like
100% and then like 10:10, I don't know, like 1000%.
And a lot of people, they're 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 Algis.
We found it. It's my Co founder for for
symbiotic as well. We're 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, we helped block chains
as well as roll ups secure their networks and as well as like big
huge defy protocols. And yeah, we analysed 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 analysed like can we help secure compilers more?
So we helped wiper like wrote like fuzzer for them and make
like security assessments of that found like several bugs.
Then we realized like OK, like there is an old code, right?
We have multi client for their differential fuzzing other
tooling. So like this is semi coloured.
OK, what can we do next? Or 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, to, to make our like development
sustainable. Because for industry sometimes
takes like, I don't know, like from 100 to $1000 to get a
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, 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.
Yeah. And it's own unoptimized or
start with the really software validator set and software 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. OK.
So you said the protocol that optimizes for that maybe, Yeah,
describe like what is the problem that Symbiotic is trying
to solve? OK.
Yeah, basically the symbiotic is trying to solve
decentralisation. Decentralisation is like it's
suboptimal. Everybody knows that redundancy
is like a step from outside of optimum.
You the, the optimal setup is you have is 1 server that's
controlled by you that's deployed, that's deployed in one
place or like with the like with few backups, if you have like a
million nodes. It's not, it's, it's suboptimal.
The centralization is something that that's really expensive for
people to maintain. It's really hard to operate.
And yeah, like our, our basic job was to create an alignment
and of incentives and UX as well like supporting tools and
general support system to make this journey easier, to make it
this journey way more easier, like way easier to digest for
new protocols. So they, when they decide to to
launch centralized or with proof of authority or like with
whitelisting of operators, they decide on full-fledged
decentralization immediately. Not a hard task because like
again, it's physics, decentralization is by
definition suboptimal. But I think we we are on the
right path to make it so that it's way easier and way more
way, well, we're way more efficient for networks to use
outside. OK, so you want to make
decentralization easier and more efficient.
I think most people think of symbiotic as like restaking
protocol. What's the common, what's the
connection between, you know, decentralization and making
decentralization easy and restaking?
Yeah, OK. Like again, the the
decentralization is suboptimal. You need to pay a lot of people
a lot of money to operate your network.
Otherwise you can just play yourself or not play 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, to, to, to operate your network.
So the journey of this centralization is quite
expensive and it's quite hard. So you need to have like with
the current, with the current proof of stake models, you need
to have something to stake first, right?
Like you, you need to launch your own token.
For this token you need to create like some legal basis,
because you, you need that for you not to get sued after that.
Now you need to have a legal basis.
You you need to spread it around with a lot of participants.
Then you need to, you need to, you need to create enough
liquidity for, 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, you need to
create a lot of things and you need to like go through a long
journey before you even think about decentralization.
And then you need to find yourself an operator set when
you find yourself an operator said like it's, you need to talk
to like each company separately. And that's when you actually can
start testing traction. And if you say like you're
talking say like around 100 mil, it is general consensus, total
circulating supply in general consensus.
You can't onboard 10 billion USD in Tether immediately because
you don't have the security base to support the circulating
supply of tokens on on your ecos like in your ecosystem or you
can't secure if you're like Oracle Network, you can't secure
1010100 bill of TVL in other defy protocols with your price
fit. So what is taken 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 this taking what it does,
it enables you to get avoid economic base from the from the
tokens that are actually stable, that have like a really good
liquidity that are listed everywhere.
And immediately start testing your traction before all of the
steps that I described like before this 6 to 16 months of
development and like trying to, to create enough of the stable
economic base, enough of the like the really good validator
set and like the, the mechanics of your tokenomics and
everything like that. You can start immediately and
you can onboard a lot of money and really good operators
immediately almost. This is the goal at least for,
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
weeks improvement, enough go to market improvement and now
enough capital efficiency to counteract and even like we
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 of state network, right, it's expensive.
There's a whole bunch of overhead coordination, finding
operator set, etcetera in the restaking case.
So if now a protocol goes to symbiotic and they say, OK, I
want to launch some chain and I want an operator set and I want
to have some economic security, then I mean, generally they'll
still use their native token, no, because they still need to
provide some kind of incentive for this.
Or they can use points or other mechanisms for that.
Like they, they, it's not there. There might be like the, the
optimization here might be achieved through V mechanics.
So lock up period dual staking baskets, taking a lot of other
like straight up model for some networks that like would never
need their talking at all. We we're exploring these
mechanisms as well. This is like a really bullish
concept, but for, 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,
you can shorten your journey by a lot, just not like launching
your talking immediately or launching it in like some
limited capacity while already testing traction of your ID or
product market feed with like a huge economic base.
So one big benefit right, that I, I can totally see is that,
you know, you're making things a lot more flexible, right?
Because, 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 protocol
say, oh, the validators have to hold some self bond in their
wallet and others can can be delegated, you know, so there's
some difference there, like let's say Tasers, a few others.
But you know, mostly it's really the kind of cosmos taking 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 its to the people staking.
So that's like really like the standard model that I think it's
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, you were mentioned or 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 conformal network,
fast finality networks, other like networks that are not
chained, they're still secured by stake and economic security,
but they're not block chains. They don't operate.
And on the same principle every decentralized chain can use not
not the chain, every decentralized network.
That's what why why they call 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
where you can 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 SDK that you
mentioned the Cosmos, Cosmos change that you mentioned they
even with the like incentives how they are to develop for
Cosmos ecosystem, they reached a lot of they, they reached a lot
of actual use cases and like a lot of teams that are building
on this tech stack because they have a unique optimization that
we are trying to achieve as well.
Just imagine if you have like registry that's can be reused
multiple times, network middlewares, trust routes 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 that they they, they launch.
So it's not a like 1 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 that is
reached for it is taken. So you don't have to pay your
validator that much or your operator that much because
you're use like the you have less, less money to to pay APY
for less amount of money. Yeah.
And like while getting to go to market and like type pure timing
optimization. So I, I feel this is actually a
very interesting aspect of like the economics of re staking and
like one way I so if you take like a typical Cosmos network,
right, So let's say tip or typical proof of stake chain
doesn't 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 valid is a 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 it to re
staking, right, if now I'm have my native token and I pay 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 know, you have to
assume that in most cases they're just going to sell the
token, right? And this is 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.
Yep. 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
APR is a bit higher than like for the classical assets because
you need to like that there is more risk involved.
So like if for Ethereum it's like 3.5%, new networks usually
pay up to like well, 1510% in some cases like so I would take
like 10% as a, as a metric. So you pay 10% for the the
amount of like that for the 100 mil that you you have, you can't
abort a lot of money. You can't get generate a lot of
fees. You can't bring B protocols
because you're limited by the amount of like your market cap.
So it's going to be a 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
on board them. So like at least for like one
bill or two bill and it's you're going to be paying 10% like on
your tokens each time. So you're going to be like
diluting your tokens. Let's take the case of like
using risk taking first. You can use mechanisms of V
tokens points or other mechanisms that to to postpone
the actual cell pressure on your tokens by months or like year if
if you have like really good user base that understands that.
So no pressure at all in 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 Etherium stakers. You can use other like million
mechanism 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, OK, like for Etherium
stakers you can create like you, you can use same if token like
say around five times, right? This is like the 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 couple of
billions in ethereal if your your system requires that.
If it's an Oracle system that's going to be like you already
have like a good BG connections to say Ava or other protocols
for them to use your price feed 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 all together. And you you test your product
market, if you don't scale immediately well-being safer
then you will never like be. So even without optimization,
yeah, like mistaken will just divide like by the order of like
by the mistaken ratio divide the amount of like cell pressure you
are going to be experienced, 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 2 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 is 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 stake rewards and
then they will have to sell some of it.
I think that's 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 because
you're paying it to your token holders anyway.
You're paying to a portion of your token holders.
That's like start, you're splitting the stocks for like
less than half of your state, less than half of.
Yeah, you, 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, 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
and maybe short term holders, market makers, traders, things
like that. People that are using this in
Defy, say, people who are like actually using token to like and
you need all of those like I I wouldn't like value one more
than the other or you don't want to proportion of like more than
half of your tokens to be staked ever.
Like this is that we had the systems that that were designed
specifically not to allow for that.
Ethereum was trying to counter that like at at all costs
because like that, that's that's how you get that, that
blockchains no, like the, the stake amount first.
Yeah, like let's let's let's like go argument by argument.
So it's not a stock split because like only a portion of
your shareholders are splitting their tokens.
OK, sure. It's different in this regard
like by 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, we, we have
analytics for that. Like it's pretty like it's
pretty well well researched and yeah, here and it's like it,
it's really like once you launch and once you actually have
stakers, the mechanics of rewards is it's kind of hard to
update for networks. Like for networks launching with
restaking, it's a bit more flexible because they have like
they have they 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 to rely on for for at least for
bootstrapping face. And then they can stimulate the
the same behavior, but with local periods and like a lot of
other mechanisms that are going to be doing the same thing that
you you're just mentioned, but doing them on the algorithmic
level, not on like oh, believe in our like operators and
validators. They're not going to be selling
or stakers. They will like that.
That's all they do. No well, except for like polka
dot ones, because most of them were like non 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
there's going to be like mechanisms that are will reward
the behaviour 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
AII disagree to some extent with one of the key narratives around
re staking. And you also like mention it.
You're like, OK, some chain launches and you know, they only
have like 100 million market cap and you know that's somehow a
problem. And if you 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
launch. 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,
OK, 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 like huge market cap,
it didn't actually secure any of the Oracle feeds, right?
It was basically APOA system. Or you know, to give another
example, you know, there's like Noble chain in Cosmos issuing
USCC again, there's not even a token there.
It's there's actually 0 economic value.
It's like proof of authority chain as well.
So I think even even in those systems where you do have like,
you know, some very high amounts of value at risk, you know, if,
if Chain Lake now said, OK, it's 10 billions of dollars is
securing these oracles, does it really make a difference to
people who really care? So I, I, I feel like the, 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 it's extremely small.
Yeah, it's not a driver of success.
It's a driver of like first it's a perception driver and then
like the the examples that you mentioned are, yeah, like chain
link where it was operating under pro 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 pro authority requires being permissioned and
being permissioned requires decision making for every
network for every price feed because you're the one who who
who's 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 permission
permissionless systems can be built.
So we have like other optimization.
Poor authority is not only bad because like it's unsafe, which
which that is, and proof of authority and small validator
sets that are controlled by networks.
They're not like they're not, they're not like they, they have
like examples where they stole people's money.
Like I remember a few of those. I, I need just need to remember
names. There were like a really small
networks that track their users with the small operator set that
was controlled by them. The biggest example of
centralization of operators is EOCR.
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, like low footprint networks, they're not
getting traction not because like that they're not getting
hacked. They just get perception of not
being safe enough. And for Oracle networks, yeah,
that's why chain link were like the perception that it was safe
help 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 changing because of the
perception and really good track record.
And this is like the the flexibility and optimization and
go to market. This really jumps is is like
innovation speed booster markets that were like gate capped by a
reputation for a long time, as well as like the operator
markets as a close, a semi close 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 reputation, but you can have the same economic actual
economic security as the bigger networks immediately.
And I think like this is really, 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, I hope I
explained a bit like why does why, why does why, 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 like works with the like hundreds or hundreds,
thousands or like millions of proposals, right?
Be it's pre confirmations, be it immediately, be it something
else. If you need a huge operator sets
to be secured by some like by by 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, the, the stake that
they're going to be using for their actual proof of stake
operations. And with this taken, you can be
like secured like 100,000 proposals can be secured by like
1 if you do more like 10 if you do.
And that's going to beat like we'll, we'll, we're still seeing
the, the risk taking 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 the system actually look like and what are
the different Yeah components and and actors in the system?
Yeah. Well, it has like basically 3
participants. First is takers, that's so that
give give their stake to to networks through operators,
operators, networks and stakers. Networks require economic
security to launch and decentralize their network.
They are receiving that from stakers through operators with
their operator set. And if network is OK, like
network is the arguably the most important participant, if it's
OK with the amount of stake that they receive and the amount of
like the the validator said that is attached to that, they opt in
and they start start to be operated by those operators
through this stake. If any of the operators violate
some rules of the network, network can slash them.
If they don't, network can reward them their their role of
restaking protocol or shared security protocol in our case is
to make sure that once the like the commitments are made that
this is the mode of work between those three that complete
commitment are commitments are like commitments are followed.
OK. So you have stakers, operators,
you have the networks. So let's talk through this from
to perspective maybe of the stakers and the operators.
So if I'm somebody who wants to now stake and I want to earn,
you know, additional rewards, maybe I have some other
interests like I don't know, maybe I find some of the
projects interesting, the building on Symbiotic or
something like that. Like what is the flow here?
The 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 of
that like the the staker wants to to manage everything
themselves, they will create a vault, a vault, the vault will
have like. Lock up 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 the unlawful slashing.
And through this resolver like it's it will select the operator
said that it's wants to delegate to and the network it wants to
opt in and through this evaluator set and once this
request is made network can agree and select this stake to
be operated. OK.
So you mentioned a lot of it stake would go through LRTSLRTS,
meaning like liquid restaking tokens for those who follow the
eigen layer. You know, you've had that there,
like ether fry, Renzo and stuff getting a lot of traction.
How, how do you imagine LO TS will work?
And, and does this mean basically as a as a staker, I
want to benefit from, you know, when we take some assets, I want
to use symbiotic. I would then just basically, for
example, take my EF and deposit it in an LOT and I get some sort
of, I don't know, Renzo, swell, Etherfy, something LOT token and
then on the back end what happens?
On the back end though, did this take through the vault of LRTS
is going to be deposited into vault on symbiotic side and it's
going to be delegated to network through the operator set by the
LRT management management team. Yeah.
And like we already have like around 1212 LR TS.
So like this is how it's like this is not an unvalidated
concept. We already received most of our
stake for LR TS because it's just like maybe more optimal
that way for most users. So, and then the LR TS would
basically they would then decide, OK, 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, OK, now we go to Network A and we say,
OK, 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, the yeah, the
sump proportion of it. So say like 5 LRTS 200 fifty
552,003 thousand users for outside of LRT and this is going
to be the set of stakers for from the beginning of the
network to be changed later. Right.
So I think what is interesting is that LO TS kind of become
this also collective like bargaining organization know
where they would like negotiate sort of on behalf of both the
stakers and the validators with operators.
Yeah, they their job is going to be to fight for for the most
optimal stake location. Yeah.
I expect a lot of optimizations to come from LRT fights once
they actually start. Yeah, 'cause they are obviously
also going to be in, yeah, very serious competition.
Yeah, of course like that 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 will have to fight and choose and try
to be on boarded into as many good networks as possible
because other other than that they're the only ones like
spreading their talking around and there is no like inherent
reward being like 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 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 in every
network already like the. This is by design the fact that
our trust route is based on Ethereum and we use like
Ethereum as like data availability and execution
layer. It doesn't mean that much like
we can, we 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 other chains that the assets on like on the Solana or any
like almost any place else can be used.
This is the unique feature of restaking kind of like shared
security, at least as how how we designed it.
The fact that you don't need immediate bridging or fast rapid
bridging. You just need to do 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 to use assets
that are like outside of Ethereum easily.
And that's how we designed. We have this collateral
abstraction and dogs like it's like a bit of a technical
concept, but basically like a lot of a lot of other outside
ecosystems are building on us. Yeah, the registry is going to
be stored on Etherium. But like everything else in
terms of ecosystem, in terms of LRT, in terms of reward, reward
management and slashing can be done on their ecosystem without
like any vampire attack from Etherium or something like that.
So as like as current thinking goes, we'll see about like the
future, but there is no like actual need for Symbiotic to be
deployed anywhere, anywhere else.
We just lose like some networks of effect.
So like let's say if you say like, OK, some Solana related
thing would use symbiotic, you guys would not need to deploy
some kind of smart contracts on Solana.
Is yeah, is there will will the, the the supply side for the
liquidity will need to have some escrow contract or a deposit
contract. That's burner contract that
yeah, that needs to be like unwrap and burn if 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 other chains, you just
deploy the this the like the the simplest of messaging players
when contract and you're good to go.
If you want to get have rewards on Solana as well, you'll need
to deploy like Solana contract of rewards.
But the registry is going to be taken from Ethereum because like
actually you don't need like there.
There are there aren't a lot of requirements to their base layer
for there is taking. It doesn't have to be like fast
in terms of finality. It doesn't have to be cheap.
It's 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 if you do miss that, that's
why we designed Symbiotic to work on if you do L1, but in
actuality like especially if like you have canonical bridge
or something or IBC, you can use it anywhere else.
You 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 we're just exploring this this
part of the wood slashing. Yeah, like it's the the main
part about it is that it's going to be it's going to be
determined by networks first of all, like this is the important
part. You don't have to like there,
there is no one-size-fits-all. For some networks like we'll
there, there's going to be like algorithmic slashing for some
reason for some networks, they're going to be subjective
slashing because you can't verify like the the actual
active misbehaviour. For other there, there can be
consensus slashing. The the fact that we designed it
really flexible manner. So like network can can can
deploy that any 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, to
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 that really flexible algorithmic ones
prove based ones or so this. Also chosen by the network.
The resolvers are chosen by both like they they are chosen by the
pair of stakers and network. They both agree on that.
The resolvers that are going to become connected through they
can be different. They can be like tiered in terms
of like how they they work. There are different
configurations from the start just to like safely innovate in
this category of of of protocols.
I think there's going to be a committee mistakes mostly.
And then most of them like will will go resolver resolver less
and like probably like or or go into route of like proof, you
know, Zeke 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? The first of all, if you look at
in the amount of money that has been 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 your ATOM, Cosmos Hub has 5% slashing, so 5% of the
state roads 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 then totally actually at the time was talking about, oh,
maybe we're going to have 100% slashing later.
And if you double sign you get. But today, Solana many years
later, it's become very, very successful, 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 a lot
of chain set or chains or all these centralized systems that
symbiotic that are using symbiotic that don't use
slashing at all? Yeah, yeah.
I expect, I expect some category of networks to to not have
slashing at all for them. Stake is going to be just
gatekeeping like mechanism and voting mechanisms.
You get enough reputation for people to vote for your network
because the money are still limited for their supply.
And you get like to gatekeep the operator set like the basically
the delegation without slashing. For some networks.
It works like in case of Solana, by the way, like the it's the
only major blockchain that was not available for like days on
end. So I think that that like no
slashing gruel backfired for them like 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, I, I don't know if that
has a lot to do with the slashing though.
The Solana downtown, I think that's different.
Like if actual people were slashed I think they would take
this outage more seriously. Yeah.
But yeah, for some networks
slashing is inevitable. Like if it's straight up, we, we
have like multiple threshold networks, security and a lot of
stake and a lot of like like wallets that are really like
high, high volume for Oracle network slashing might be like
really essential if their oracles are like option based or
like calculation based. And for, for some networks, even
the eco processor networks, unique slashing is going to be
really important because if they don't perform within this,
within this like some small window, they might deliver a lot
of like a lot of harm to users. For a tester network that this
might be really important because like what what's
stopping you from like issue and attestation that like you
receive transaction and transactions finalized when you
actually don't have that? And like they're like exchanges
are going to get hurt or some people that are going to get
hurt in process or like arbitrars.
Arbitrars are going to be hurt. Yeah, for pre confirmation, it's
obviously a big deal because like people if they don't have
like the other like somewhere old, like included in the block,
they will lose a lot of money. So that they might be immediate
harm. For blockchains with like with
modern consensus mechanisms, yeah, the harm is like limited a
lot. So they might like skip their
leg day and disable or not enable yeah, not enable the the
slashing call together. I think the will the the the
shared security will help find this like sweet spot because
like the difference is going to be quite noticeable just because
like the the overall experience will be more streamlined and you
will you'll have like 2 networks launching at the same time, 1 be
slashing the other one is not without and see like how it goes
from both sides. So what about immutability of
the symbiotic contracts? Is that something where you
think they should be like fixed, immutable?
Is there a rule for governance there?
Yeah, well, like it was. This was the hard part, to
actually design the system to be as flexible as it is, but still
immutable at its at its core. Like it took us 8 months to do
that. Yeah, but we did.
As with everything else, the goal was for us to cater to as
much possible network types and like business type types and
token 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, to reach
optimization as with the highest, the highest rate of
like with the, with the highest success success rate possible.
And for that, yeah, like there there's no way for us to
introduce Peace 1st and there is no way for us to upgrade the
contracts. So yeah, like there is no, 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, right?
It was V2 and then V3. So do you also imagine there
will 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 8 months that we were like
developing the architecture and if we were so great that we
designed the system to work for V1 forever and account for every
possible use case, then yeah, sure.
Like V1 is going to be it for a while.
But we, we have like that they're 100% going to be
optimization in auxiliary systems and like well,
upgradable parts. Then the core is going to be
just widely reused by everyone forever.
And the like, the actual value add is going to be reached
through auxiliary systems. If like we identified like, and
this is like probably closer to what will happen if we
identified we haven't yet. Like Full disclosure, we for
now, the core works ideally like it works great, but like the,
the when the industry starts and then matures, if we identify
something, there is of course going to be like we, we, if 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 like
migrated as like secure as possible.
So people would 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 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 3 1/2 months I guess.
And since then we go to around 40 networks, 30 something like
closer to 40 or 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, ZK ecoprocessors, the couple of thresholds, couple
of no one I think fully homomorphic encryption network.
Yeah, like basically everything a role kit for roll ups on even
on Celestia like several TASI for, for substrate based like
roll up dual deployment and network deployment, like several
SDKS. Yeah, we have basically every
every primitive in terms of the centralized networks like
already on us, they were like building on us Excited for all
of them, but more excited for the ones that launched before
2025. Like this is the the the only
metric that I can score people over.
Like are you going to be actually launching before before
the end of the year or like or after?
Because that each, each network that launches helps the others
to to see the light and to get the optimization.
Because if you consider currently like the 0 AV s s or
networks are actually launched. So if you're considering being
launched centralized, being going through the centralization
journey alone with like your team only or launching with
shared security, it's not an like easy decision.
But the more networks actually launch, even the Avs is the
more, the more of like the 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 to sway you in the direction of shared
security. And that's what we want.
So you just mentioned timeline. So what are what are the main
milestones that are coming up with Symbiotic?
Yeah, We're going to launch Mainnet soon, getting toward
that, towards that for a while. We just wait for networks to be
ready because we don't want anyone 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. And like we're currently getting
to a point where the actual good questions are starting to be
started to be asked. Not the conceptual ones, but
like actual UX questions like what's the local period that I
need to use like to get the most alerties?
What's there? I don't know like how do I
approach validator? Like validators?
I don't want to talk to like each one of them, other
consortiums of them are the groups of them I can reach out
to. Like I, I don't want to, 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 the, the, the 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, they want, they just want
them like a, OK, how do I get the best operator said that,
that investors are getting off my back immediately.
How do I get to the the stake amount so I can like launch
protocols without and tell them that they have enough support?
How do I get the the the best like the the the text tag that I
can immediately use 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, Michelle.
It's been it's been really great to have you on.
I'm excited. I think it's, I think it's, I
think Semioli 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 secure
decentralized systems. And yeah, I'm, I'm super
thrilled to see like what, what's going to come out of
that. So thanks so much for coming on
and thanks so much for, yeah, giving us this update.
Thank you. Yeah, interesting, interesting
questions. Thank you for that.
I am super happy to be here and super happy to spread the
mission and ideas.