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Introducing Symbiotic - The latest restaking protocol in town
Bringing flexible, capital-efficient, multi-asset restaking for all of crypto
June 18, 2024
5 min read

Restaking Summer has arrived.

The staking revolution on Ethereum and other proof-of-stake blockchains has been one of the biggest developments in crypto over the past few years. First came staking pools and services that allowed users to earn rewards by contributing their crypto assets to help secure these networks. Then liquid staking derivatives like stETH unlocked composability and liquidity - holders could put their staked assets to work earning yield in DeFi while still earning staking rewards.

The first half of 2024 has seen the rise of restaking - protocols that allow staked assets like stETH, wETH, osETH and more to be recursively staked to earn compounding rewards. EigenLayer took restaking mainstream, locking nearly $20B in TVL (at the time of writing) as users flocked to maximize their yields. But restaking has been limited to a single asset like ETH so far.

Enter Symbiotic

Now, a new protocol called Symbiotic is aiming to push restaking into its next phase - a permissionless, asset-agnostic restaking layer for all of crypto.

Symbiotic is a generalized shared security protocol that serves as a thin coordination layer. It empowers network builders to source operators and scale economic security for their decentralized network.

At its core, Symbiotic separates the concepts of staking capital ("collateral") and validator infrastructure. This allows networks to tap into pools of staked assets as economic bandwidth, while giving stakeholders full flexibility in delegating to the operators of their choice.

The Symbiotic protocol has a modular design with five core components that work together to provide a flexible and efficient ecosystem for decentralized networks.

  1. Collateral: ERC-20 tokens representing staked assets or liquidity positions from various blockchains, enabling cross-chain capital efficiency.
  2. Vaults: A key component handling delegation and restaking management, responsible for accounting, delegation strategies, and reward distribution. Vaults can be configured in various ways to create differentiated products.
  3. Operators: Entities like Chorus One that run infrastructure for decentralized networks within and outside the Symbiotic ecosystem. The protocol creates an operator registry and enables them to opt-in to networks and receive economic backing from restakers through vaults.
  4. Resolvers: Contracts or entities that handle slashing incidents forwarded from networks, with the ability to veto these incidents. Resolvers can take the form of committees or decentralized dispute resolution frameworks, providing added security to participants.
  5. Networks: Protocols that rely on decentralized infrastructure to deliver services in the crypto economy. Symbiotic's modular design allows developers to define engagement rules for participants in multi-subnetwork protocols.

The 5 core components of Symbiotic (https://docs.symbiotic.fi/)
Understanding how the protocol works

  1. Users can deposit their assets and mint Collateral into trusted Vaults (e.g., a Chorus One-specific vault). These Vaults predefine the eligible collateral, such as ETH, stablecoins, LP positions, etc.

  2. Vaults then manage the delegation of assets to operators or opt-in to run the infrastructure of chosen Networks (in the case of operator-specific Vaults like the Chorus One Vault). For Vaults that are not operator-specific, Symbiotic offers a registry of operators with their credentials to facilitate restakers’ delegation strategies.

  3. While Vaults define acceptable collateral, Networks need to accept this collateral. Additionally, Vaults and Networks must agree on the slashing and reward distribution logic.

What makes Symbiotic unique?

Symbiotic leverages a flexible model with specific characteristics that offer distinct advantages to each stakeholder:

For Operators:

  • Operators can secure stakes from a diverse range of restakers with varying risk tolerances without needing to establish separate infrastructures for each one.

For Restakers:

  • Restakers can delegate assets beyond ETH and select trusted Vaults for their deposits. They also have the option to place their collateral in immutable Vaults, ensuring that the terms cannot be altered in the future.

For Networks:

  • Networks can collaborate with top-tier operators who have verified credentials. When sourcing security, networks can choose operators based on reputation or other important criteria. The flexibility in collateral options leads to a more extensive security pool, potentially reducing security costs for networks.

The protocol opened for deposits on June 11th, and it was met with much fanfare and demand: within a mere 5 hours of going live, a whopping 41,000 staked wETH had already been deposited into the protocol - smashing through the initial cap! New crypto assets and higher caps will be added as the protocol onboards more networks and operators.

Symbiotic vs. EigenLayer

Symbiotic sets itself apart with a permissionless and modular framework, providing enhanced flexibility and control. Key features include:

  1. Multi-asset support: Symbiotic permits direct deposits of any ERC-20 token, enhancing its versatility compared to EigenLayer, which is primarily centered around ETH and its derivatives. Nonetheless, EigenLayer has indicated the potential to support any asset in the future.
  2. Customizable Parameters: Networks utilizing Symbiotic can select their collateral assets, node operators, rewards, and slashing conditions. This modularity grants networks the freedom to tailor their security settings to meet specific needs.
  3. Immutable Core Contracts: Symbiotic’s core contracts are non-upgradeable, which minimizes governance risks and potential points of failure.
  4. Permissionless Design: Symbiotic fosters a more decentralized and open ecosystem by enabling any decentralized application to integrate without needing prior approval.

EigenLayer employs a more managed and centralized strategy, concentrating on utilizing the security provided by ETH stakers to back various decentralized applications (AVSs):

  1. Single Asset Focus: EigenLayer primarily supports ETH and its derivatives. This focus can limit flexibility compared to Symbiotic’s broader multi-asset support.
  2. Centralized Oversight: EigenLayer oversees the delegation of staked ETH to node operators responsible for validating different AVSs.
  3. Dynamic Marketplace: EigenLayer offers a marketplace for decentralized trust, enabling developers to leverage pooled ETH security to launch new protocols and applications, with risks being distributed among pool depositors.

Symbiotic x Mellow Protocol

Symbiotic has collaborated extensively with Mellow Protocol, its "native flagship" liquid restaking solution. This partnership empowers node operators and other curators to create their own composable LRTs, allowing them to manage risks by choosing networks that align with their specific requirements, rather than having these decisions imposed by restaking protocols.

Mellow provides the ability for anyone, including hedge funds and node operators, to deploy a Liquid Restaking Token. This will likely lead to a significant increase in the number of LRTs, complicating their integration with DeFi protocols and affecting liquidity. Despite these challenges, Mellow offers several advantages:

  • Varied Risk Profiles: Traditional LRTs often impose a single risk profile on all users. Mellow enables multiple risk-adjusted models, allowing users to select their desired level of risk exposure.
  • Modular Infrastructure: Mellow's modular design permits networks to request specific assets and configurations, enabling risk curators to create tailored LRTs to meet their needs.
  • Smart Contract Risk: By allowing modular risk management, Mellow reduces the risk of bugs in smart contracts and logic of Shared Security Networks, providing a safer environment for restakers.
  • Operator Centralization: Mellow prevents centralization by distributing the decision-making process for operator selection, ensuring a balanced and decentralized operator ecosystem. Existing LTRs determine which operators should validate their pooled ETH, as well as what AVS they opt in to, effectively managing Risk on behalf of users.
  • LRT Looping Risk: Mellow addresses the risk of liquidity issues caused by withdrawal closures, with current withdrawals taking 24 hours.

Symbiotic restaking is LIVE on our staking dApp, OPUS Pool

We’re proud to share that we have integrated Symbiotic restaking into our staking dApp, OPUS Pool.  

​​OPUS users can now seamlessly tap into Symbiotic's restaking capabilities with just a few clicks on our dApp. When the cap is relifted, simply deposit your assets to start earning Symbiotic points, which can soon be delegated to operators like Chorus One to earn rewards.

Not only is the process incredibly user-friendly, but it's fully secure and censorship-resistant - restaking as it was meant to be.

Start restaking today at: https://opus.chorus.one/pool/restake

Resources:

Symbiotic Website: https://symbiotic.fi/

Docs: https://docs.symbiotic.fi/

Twitter:https://x.com/symbioticfi

About Chorus One

Chorus One is one of the biggest institutional staking providers globally, operating infrastructure for 50+ Proof-of-Stake networks, including Ethereum, Cosmos, Solana, Avalanche, and Near, amongst others. Since 2018, we have been at the forefront of the PoS industry and now offer easy enterprise-grade staking solutions, industry-leading research, and also invest in some of the most cutting-edge protocols through Chorus Ventures. We are a team of over 50 passionate individuals spread throughout the globe who believe in the transformative power of blockchain technology.

Core Research
Ethena: Delving into the Mechanics and Risks of USDe
An in-depth analysis of the risks and opportunities of Ethena Labs
June 17, 2024
5 min read

This article is extracted from the Q1 2024 Quarterly Insights. To read the full report, please visit https://chorus.one/reports-research/quarterly-network-insights-q1-2024

Ethena is a project that has recently captured significant attention, driven not only by their fundraising announcement in February but also by the early April launch of their governance token, $ENA. However, it is their product called USDe, that lies at the heartof ongoing debates and discussions.Described by the Ethena team as a 'synthetic dollar', a concept originally proposed by Bitmex, USDe has emerged as a focal point of discussion within the crypto community. While USDe may indeed be perceived as an innovative product, it's essential to acknowledge that all innovation carries inherent risks that must be carefully evaluated.This piece aims to explain how Ethena operates, including the mechanisms behind USDe and sUSDe, while also examining market dynamics and potential vulnerabilities in the case of black swan scenarios. The goal is to provide readers with comprehensive insights to better understand Ethena’s mechanisms.

Getting Started with the Fundamentals

When reviewing the official documentation, one will find the following passages:

Ethena is a synthetic dollar protocol built on Ethereum that provides a crypto-native solution for money not reliant on traditional banking system infrastructure, alongside a globally accessible dollar denominated instrument - the 'Internet Bond'.

and

Ethena's synthetic dollar, USDe, provides the crypto-native, scalable solution for money achieved by delta-hedging Ethereum and Bitcoin collateral. USDe is fully-backed (subject to the discussion in the Risks section regarding events potentially resulting in loss of backing) and free to compose throughout DeFi.

Understanding USDe isn't necessarily straightforward for everyone, as it necessitates some basic understanding of trading strategies and derivative products. What Ethena is doing with USDe is a cash and carry trade, which is a concept very well known in TradFi.

In this specific scenario, Ethena's objective in executing a cash and carry trade is to use spot assets as collateral to open a short position with a perpetual futures contract linked to the same underlying assets. That way, the position is delta-hedged and Ethena capitalizes on positive funding rates, ultimately distributing profits between USDe stakers (those who hold sUSDe tokens) and an insurance fund.

For those not familiar with the concept of perpetual futures contracts and delta hedging/delta neutral strategies, let’s define the concepts.

Perpetual futures contracts were popularized by BitMEX and are crypto derivatives that allow users to trade long or short positions with leverage if they want to. The concept is similar to traditional Futures Contracts but without an expiration date or settlement. Traders can maintain their positions indefinitely, with a funding mechanism ensuring that the contract's price stays closely tied to the spot price of the underlying asset.

  • If the index price exceeds the spot price due to more long positions than short, long traders have to pay a funding rate to short, incentivizing adjustments to bring the price closer to the spot level.
  • Conversely, an excess of short positions forces short traders to pay a funding rate to longs, ensuring convergence of the perpetual price to the spot price.

A Delta Neutral strategy is a strategy that aims to minimize directional risk by keeping a position's delta at zero. To achieve delta neutrality, traders typically offset the delta of one position with the deltaof another position in such a way that any gains or losses from price movements are balanced out.

This strategy is popular among professional traders and market makers to hedge against market direction. Ethena uses this strategy to keep USDe stable around $1 without being affected by market movements.

Let’s take a look at a concrete example:

Let’s take the example of stETH. We assume stETH is trading at par(1 stETH = 1 ETH) with the price of ETH at $3000. If the price of ETH increases by 10% from $3000 to $3300, here's what will happen:

  • For the first leg, which is the collateral (long stETH position), the P&L would be $300 + staking yield.  
  • For the second leg, which is the short perpetual ETH position, the P&L would be -$300+ funding rate.

Note: If the stETH/ETH pair experiences a depeg, it could potentially result in a liquidation event, which may cause USDe to no longer be backed by $1 worth of collateral.

Therefore, the total P&L of the position would be:

Total P&L = $300 + staking yield - 300 + funding rate

The generalized formula would be:

Total P&L = (Δa+Σ pk) + (Гb+ f)

Δ = rate of change of position a
a = collateral
p = additional parameters related to asset a (example: staking yield)
Г = rate of change of position
bf = funding rate

To conclude this part, we can argue that USDe is not a stablecoin. Ethena’s USDe represents a tokenized, delta-hedged strategy. It’s a pioneering concept that offers decentralized access to a hedge fund’s strategy.

Core Protocol Components

A. The USDe total supply

There are exclusively two ways to acquire USDe, depending on whether one is a whitelisted participant (a market maker for example) or not. The methods vary as follows:

1)gMintingA whitelisted entity decides to mint USDe by selecting a backing asset (like stETH) and entering the amount to use for minting. Then, the backing asset is swapped against the agreed amount of USDe that is newly minted.

Note: This method is exclusively available for whitelisted entities.

2)Buying though a liquidity poolA user decides to buy USDe via the Ethena dApp and can exchange different sorts of stablecoins for USDe, which are available in liquidity pools from protocols such as Curve. This transaction done via the Ethena UI, is routed using MEV protection through CowSwap.

At the time of writing, the total supply of USDe is 2,317,686,500 USDe in circulation. The evolution of the cumulative supply can be seen on the dashboard below:

Source: Ethena Labs on May 16th

As we can see, USDe has experienced steady growth from February until early April, and then has stagnated for most of the months of April and May.

The largest daily inflow occurred on April 2nd, with 232,176,843 USDe minted. This corresponds to the launch of the $ENA governance token and its associated airdrop.

Source: https://dune.com/kambenbrik/ethena-usde

On the contrary, the largest outflow occurred on April 13th, with 19,514,466 USDe removed from circulation. This happened duringa sell-off triggered by the Bitcoin halving and the fact that funding turned negative during that short period of time.

To redeem USDe, only addresses whitelisted by the Ethena Protocol are eligible. These whitelisted addresses typically belong to entities such as market makers or arbitrageurs. For non-whitelisted addresses, the only way to exit is by selling USDe in liquidity pools, which can lead to a depegging event, similar to what occurredmid-April 2024 and May 2024.

In these specific scenarios, whitelisted addresses capitalize on this arbitrage opportunity by buying USDe on-chain and redeeming the collateral to realize profits.

B. Ethena’s collateral

Whitelisted addresses have the ability to generate USDe by providing a range of collateral options, including BTC, ETH, ETH LSTs, or USDT. Below is the current allocation of collateral held by Ethena:

This allocation is split between CEXs for executing a cash and carry trade, with some portion remaining unallocated.

Source: Ethena Labs on May 16th

The purpose of USDT is to purchase collateral and establish a delta-hedged position. However, there is currently a lack of publicly available information regarding the frequency of swaps, the trading process, and allocation specifics. Similar to a traditional hedge fund, this aspect appears to be at the discretion of the team, which makes this process opaque.

C. USDe, sUSDe and Insurance Fund

USDe could be seen as a claim over Ethena’s collateral. Users provide collateral (BTC, ETH, etc.) and receive USDe in exchange, while Ethena delta hedges the collateral to ensure that 1 USDe should be worth $1 of Ethena collateral (factoring the execution costs). Therefore, USDe could be seen as a notice debt, in which if you decide to reclaim the collateral, users should be able to redeem it. USDe could be seen as a claim over Ethena’s collateral, users provide a collateral (BTC, ETH etc), and receive in exchange USDe which delta collateral the collateral to ensure that 1 USDe should be worth $1 of Ethena collateral (magnus execution cost). Therefore, USDe could be seen as a debt or a 'repayment commitment' from Ethena Labs, wherein USDe holders can redeem Ethena’s collateral.

However, even if considered a debt, holding USDe does not offer any yield. To earn yield on USDe, users can either:

  • Provide USDe liquidity in DeFi
  • Stake their USDe into sUSDe

In the second case, USDe has to be staked in order to receive the yield which comes from two sources:

  • Staking yield (when applied, such as stETH)
  • Funding rate

Yield is not paid directly to sUSDe holders; rather, it accumulates within the staking contract, resulting in the "value" of sUSDe rising over time. The relationship between sUSDe and USDe is as follows:

sUSDe:USDe ratio = Total sUSDe supply / Total USDe staked + total protocol yield deposited

At the time of writing, 1 sUSDE = 1.058 USDe

What is surprising is when we look at the data, it seems like only a few portion of USDe holders are staking their USDe to earn a yield.

The portion of 370,127,486 sUSDe represents 391,594,880 USDe with a ratio of 1.058.

Out of the 2,317,686,500 USDe in circulation, only 391,594,880 are staked and generating yield. This represents only 16.8% of the supply that is staked and generates yield.Why wouldn't the remaining 83.2% stake to get the yield? This is because of the Sats Campaign.

Ethena is currently running a SATS campaign that incentivizes USDe holders not to stake by giving them SATS, which would result in additional incentives in ENA by locking USDe, holding it, or providing USDe liquidity into diverse protocols.

Therefore, Ethena is using the ENA tokens as incentives to prevent USDe holders from staking it. Why is that? Because of the Insurance Fund.

The Insurance Fund is a safety measure created by the Ethena team to have a reserve for use in case of events such as negative funding rates (which we will discuss later in this article).The Insurance Fund can be track in the following address.

Which represents a total of more than $39 million. Part of Ethena’s strategy is to use ENA to incentivize USDe holders not to stakein order to fill in the insurance fund and prepare in case of a bad scenario. This sets the stage for the next part, in which we will discuss some of the intrinsic risks related to the protocol.

Note: Since the publication of this article, the number of sUSDe in circulation has significantly increased. This is due to the fact that the insurance fund now has a fairly large treasury, as well as the increase in the caps for sUSDe on Pendle.

Intrinsic risks of the protocol

A. Negative funding rates

One of the most well-known risks of Ethena’s architecture is probably the risk of funding rates turning negative. As explained in the first part, Ethena is taking a short perpetual position to delta-hedge the spot collateral. If the funding rates turn negative (indicating more people are on the short side than the long side), there is a risk that the protocol starts losing money.

There are two mechanisms in place to mitigate losses coming from negative funding rates:

  • The staking yield generated by the assets. As of now, the collateral yield accounts for 0.66% of the Collateral Notional. With a total value of $2.3 billion, this represents around $15.18 million annually.
  • The Insurance Fund: As previously mentioned, it currently holds approximately +$39 million and receives daily yields from those who are not staking USDe.

The Insurance Fund steps in when the negative funding rate > the collateral yield.

Based on Ethena’s analysis, there has only been one quarter in the last 3 years where the average sum yield was negative, and this data was polluted by the ETH PoW arbitrage period, which was a one-off event that dragged funding deeply negative.

However, it’s important to mention that past data is not necessarilya representation of the future. As of May 13, 2024, Ethena represents 14% of the total Open Interest on ETH, and approximately 5% of the total open interest on BTC.


If Ethena continues to grow, there is a chance that it will start representing too significant a portion of the total open interestto be known to be on the short side, leading to a natural decreasein funding rates and potentially experiencing negative funding rates more often due to the protocol becoming too large for the market.

If this scenario happens, Ethena will be forced at some point to cap USDe supply in order to adapt to the total open interest. Otherwise, Ethena would shoot itself in the foot.

B. The Liquidity Crunch

This is somewhat related to the negative funding rates mentioned earlier. When negative funding rates occur, there is a sell-off, as shown here:

Source: https://www.coinglass.com/funding/BTC

We can notice that funding rates started to be more frequent on some specific exchanges between mid-April and mid-May. This has been translated into some periods of USDe depegs, withan inflow of USDe probably explained by whitelisted entities taking advantage of that depeg, and a USDe total supply not really growing.

The only way for non-whitelisted people to exit from USDe is to sell on the market, which will create a depeg. This will be captured by the whitelisted entities. If a depeg happens, whitelisted entities will buy USDe at a discount to redeem collateral by giving back USDe, therefore reducing the USDe circulating supply and capturing the profits.

This is an easy way for whitelisted entities to capture profits.

Example:

With negative funding rates, some people decide to exit USDe and sell on a DEX. USDe is now trading at $0.8. Whitelisted actors will buy USDe at $0.8 and redeem USDe against BTC or ETH for $1 worth of assets, then sell the collateral to capture $0.2 of profits (factoring the execution cost).

Things become more complex when they have to deal with ETH LSTs; this is where the liquidity crunch can happen. Ethena currently has 14% of its total collateral in ETH LSTs, which at the time of writing, represents around $324 million. It is not detailed which assets are held within the LSTs category, therefore we will assume it’s mostly stETH.

Let’s now imagine a scenario where all native assets such as ETH and BTC have been redeemed by whitelisted actors, and Ethena now only has ETH LSTs as collateral.

Funding rates turn negative again, there is a sell-off of USDe, and whitelisted actors start redeeming USDe against ETH LSTs. Different scenarios can happen, we will present three main scenarios below:

Scenario 1: Whitelisted entities are directly selling the ETH LSTs on the market, capturing some profits but also reducing the arbitrage opportunity if more and more actors do so, as the ETH/ETH LSTs pair will start depegging.

This scenario can happen initially, and some traders will take advantage of the ETH/stETH depeg to buy stETH at a discount and unstake to get ETH. This will start impacting the exit/unstaking queue, leading to negative consequences in other scenarios.

Scenario 2: Whitelisted entities decide to unstake the ETH LSTs to get ETH and simultaneously open a short perp position on ETH to delta hedge and mitigate the risk associated with the token price.

They then wait for the exit queue to end, get the native ETH, close the short perp position, and profit.

If the funding rates are negative, the whitelisted actor might not engage in this arbitrage and redeem the collateral because it depends on how negative the funding rates are and how long the exit queue is.

If the exit queue is too long and funding rates are too negativeto make that trade profitable, then actors who don’t want exposure to the asset price won’t take that trade. This would leave USDe depegged and trigger a bank run, with more and more people selling their USDe on the market.

  • They face duration risk: if the exit queue to unstake is too long, they won’t take that trade because they don’t want to wait that long to receive native ETH.
  • If USDe behaves like a falling knife, they might also refrain from taking that trade because they don’t want to buy USDe and redeem it, knowing that USDe sell-offs keep happening and the discount will be larger.

If USDe starts depegging and remains that way, Ethena’s insurance fund will also take a significant hit, mostly due to the negative funding rates and the fact that a portion of the insurance fund is in USDe. 


Of course, all these scenarios would only occur in a situation of a very extreme event. However, if such a scenario were to happen, non-whitelisted USDe holders would suffer the most, as their only way of exit would be to sell USDe. At least, changing this model by offering the redemption feature to everyone could improve the situation. In any case, if Ethena were to become big enough, this could lead to significant unstaking events, thereby impacting Ethereum's economic security.

If an attacker sees that most of Ethena's collateral is in ETH LSTs, they can choose to borrow USDe, sell it heavily on liquidity poolsto break the peg, allow the first whitelisted actors to arbitrage and begin increasing the unstaking queue, and then keep selling massively USDe to start a bank run.

That's why it's important for Ethena not to grow too large and to ensure that the collateral in ETH LSTs is also capped.

C. The Execution risk

Holding USDe also involves trusting the Ethena team to execute the cash and carry trade effectively. Unfortunately, there isn't much information available about how this trade is executed. After reviewing the official documentation, there is no information provided about the trading team or how frequently this trade occurs. For example, there is currently $109.5 million of unallocated collateral in USDT, which will be used for the cash and carry trade, but no information on when those trades will be executed.

This is a review of the hidden risks associated with Ethena that users should be aware of. Of course, there are many more traditional risks related to the protocol, such as smart contract risks, custodial risks, or exchange risks. The Ethena team has done a great job of mentioning these traditional risks here.

In conclusion, the goal of this article was to explain what Ethena is, show the various mechanisms behind the protocol and its innovations, while also outlining the associated risks. Users of a protocol should be aware of their exposures and act accordingly, there is no free lunch in the market, and Ethena presents multiple risks that should be taken into account before engaging with the protocol.

About Chorus One

Chorus One is one of the biggest institutional staking providers globally, operating infrastructure for 50+ Proof-of-Stake networks, including Ethereum, Cosmos, Solana, Avalanche, and Near, amongst others. Since 2018, we have been at the forefront of the PoS industry and now offer easy enterprise-grade staking solutions, industry-leading research, and also invest in some of the most cutting-edge protocols through Chorus Ventures. We are a team of over 50 passionate individuals spread throughout the globe who believe in the transformative power of blockchain technology.

News
Chorus One and E Money Network Partner to Enable Seamless Ethereum Staking and RWA Opportunities
Chorus One and E Money Network have partnered to enable E Money wallet users to effortlessly stake Ethereum and earn attractive returns while maintaining complete control over their funds
June 5, 2024
5 min read

We're excited to announce that Chorus One has partnered with E Money Network, a pioneering MiCA-compliant blockchain for real-world asset (RWA) tokenization. This collaboration brings together two companies committed to driving accessibility and trust in the digital assets space.

Through this partnership, E Money Network will integrate Chorus One's OPUS software development kit (SDK), enabling E Money wallet users to effortlessly stake their Ethereum (ETH) and earn rewards while maintaining liquidity. The OPUS SDK provides a secure and seamless way for institutions like E Money to offer staking services within their platform.

For E Money users, this integration unlocks new opportunities to grow their crypto holdings simply by holding assets in their wallet. Staking ETH has never been easier - users can earn passive income without complex setup or compromising access to their funds. This aligns perfectly with E Money's mission of bridging liquidity between traditional and decentralized finance.

Chorus One is excited to work with an innovative and compliance-focused platform like E Money. This partnership allows Chorus One to expand staking services to E Money Network’s user base while exploring possibilities in the emerging RWA tokenization space. RWA tokenization, led by E Money Network, could unlock liquidity for staked assets in the future.

"We're thrilled to partner with E Money Network and bring seamless staking to their community of users," said Sam Khler, Head of Business Development at Chorus One. "E Money's regulatory strengths and RWA capabilities create exciting opportunities as we work together to make staking more accessible."

Both Chorus One and E Money Network place a major emphasis on regulatory compliance, security and building trust with users. E Money Network has KYC and AML compliance integrated at the infrastructure level, while Chorus One is a pioneer in secure, regulated staking services for institutions.

"Partnering with an industry leader like Chorus One is a major milestone towards seamless accessibility for crypto staking," said Raj Bagadi, CEO of E Money Network. "E Money Network prides itself on compliance and user security; together we can provide a staking experience that prioritizes trust and simplicity."

As the crypto ecosystem continues evolving, strategic partnerships like this pave the way for real-world use cases and adoption of blockchain technology. The future is collaborative, compliant and user-friendly - and this alliance puts that vision into practice.

The OPUS SDK

Our OPUS SDK allows any institution to seamlessly integrate secure Ethereum staking into their product with up to 90% reduced development time. It comes packed with institutional features like liquid staking and restaking to maximize yields. OPUS abstracts away the complex staking infrastructure while prioritizing security and compliance. With our industry-leading solution, you can effortlessly offer trusted ETH staking services to drive blockchain adoption for your users.

About Chorus One

Chorus One is one of the biggest institutional staking providers globally, operating infrastructure for 50+ Proof-of-Stake networks, including Ethereum, Cosmos, Solana, Avalanche, and Near, amongst others. Since 2018, we have been at the forefront of the PoS industry and now offer easy enterprise-grade staking solutions, industry-leading research, and also invest in some of the most cutting-edge protocols through Chorus Ventures. We are a team of over 50 passionate individuals spread throughout the globe who believe in the transformative power of blockchain technology.

Networks
Understanding Aptos: How its Technical Architecture and Modular Design Transcends Monolithic Chains
Deep dive into Aptos' multi-layer approach that outperforms monolithic chains
May 16, 2024
5 min read

In blockchains, reliability and accessibility are key factors for increased web3 adoption, addressing certain bottlenecks in existing layer-1 protocol implementations. In distributed systems such as blockchain, the process of carrying out a transaction differs from modifying the ledger's state and recording the outcomes.

Aptos is designed in a modular way, which enables quick development and facilitates faster release cycles. Unlike monolithic architectures that require extensive time for editing, auditing, and testing, this modular approach allows changes to be focused on specific modules. This offers a systematic way to expand validators beyond just one machine by granting them access to more computational power, network capabilities, and storage options.

A brief introduction to Aptos

Aptos is a Layer 1 Proof-of-Stake blockchain. It uses Move, a programming language developed from Meta’s Diem and Novi projects. Move is designed for safety and reliability, harnessing the power of Rust, a low-level programming language.

Aptos’ technological stack features many novel models, including the AptosBFTv4 consensus mechanism, the Quorum Store mempool protocol, the Block-STM parallel execution engine, and Move on Aptos. The transaction flow on Aptos is distinctly different from most competing networks, with every step of the process—from broadcasting transactions, ordering block metadata, to consolidating storage—happening concurrently in a modular fashion.

Deep Dive into Aptos Consensus Mechanism - AptosBFT

AptosBFT, originally named DiemBFT, is a consensus algorithm developed by Diem’s core blockchain developers, many of whom now contribute to Aptos through Aptos Labs. AptosBFT implements increased throughput and lower latency compared to existing PBFT through a round-by-round consensus and block chaining. AptosBFT v4 enhances transaction processing speed through linear communication and chaining, improving synchronization speed among validators via a 'Pacemaker' and 'Timeout' mechanism.

The Aptos Labs team also introduced Quorum Store, an implementation of Narwhal. Quorum improves consensus throughput by decoupling data dissemination from network consensus. Before Quorum Store, transaction processing involved two major phases: Mempool and Consensus. An intermediate phase, the Quorum phase, was added between them. The Mempool holds potential user transactions, Quorum Store pulls batches of these transactions, broadcasts them, and forms proofs of their availability. Consensus orders these proofs, and execution uses Quorum Store to map them back to the corresponding transaction batches, thereby solving the problem of transaction redundancy efficiently.

Architectural Design

DPoS - Delegated Staking: This serves as an expansion of the staking protocol. It involves a delegation pool acting as an intermediary between the stake owner and the validator. This pool can gather stakes from delegators and include them in the native stake pool linked to the validator on their behalf. This system enables various entities to meet the criteria for a validator to join the set by pooling stakes. Delegators have the option to contribute to an inactive pool, but rewards are only earned once it becomes active. The minimum stake is 11 APT, with the option to unstake at any time, but funds are not available until the next validator unlock date. Delegators are paid 8% of the service fees.

Move: Aptos blockchain seamlessly incorporates and utilizes the Move programming language for rapid and reliable transaction processing. The Move Prover, a formal validator for smart contracts written in Move, offers security against common errors, providing builders and developers tools to defend projects against attack vectors like double-spending.

Parallel Execution: Aptos handles transaction processing in parallel without requiring an upfront declaration of user-known dependencies, unlike other blockchains such as Solana and Sui. This approach facilitates more intricate transactions, reducing costs and latency for end users.

Transaction Flow: Aptos maximizes throughput and reduces complexity in transaction processing by dividing it into three stages: pipelining, batching, and parallel execution. These stages can be parallelized, enabling novel modes of validator-client interaction and enhancing development timelines by treating each phase as a separate entity. Transactions are organized into batches by each validator, merged into blocks through a consensus mechanism.

Tokenomics

The native token of the Aptos ecosystem (APT token) serves multiple purposes:

  • Transaction Fees: The native token pays for network transactions and rewards validators.
  • Validator Staking: Token holders can stake their APT, contributing to the network's security and stability, and earning additional APT tokens.
  • Governance: Token holders can participate in on-chain governance, voting on protocol upgrades, changes to economic parameters, and other proposals.

As of October 2022, the total token supply of APT is 1 billion tokens, with a circulating supply of 130,000,000.

Aptos Ecosystem

The Aptos ecosystem is growing thanks to continued efforts to improve UX through safety and performance.

Decentralized Finance (DeFi): Several DeFi projects are building DEX Aggregator, DeFi HyperApp, Liquidity engine, and perpetual DEX on Aptos.

Improved User Experience (UX): Platforms are building tools and products to simplify the process of building scalable applications on Aptos.

On-chain Gaming: Platforms are using Aptos SDK to build multi-platform applications by bringing decentralization to Unity developers.

Aptos is also facilitating interoperability by launching bridges like Wormhole on Aptos that allow native Ethereum and Solana users to move into the Aptos ecosystem.

Aptos’ Future

Technical Improvements: Contributors to the Aptos protocol are committed to making the network more scalable, performant, and robust. The team at Aptos Labs developed a solution for deep testing called  Previewnet that replicates what Aptos mainnet will look like in the coming months.

The team also unlocked a new record of >30k TPS  (Transaction per seconds) in the Previewnet. Aptos is striving to expand scalability even more, aiming for >100k TPS as their next goal on the path to surpassing 1 million TPS. This bold target is in line with Aptos' goal of building a platform that can cater to billions of users, paving the way for widespread adoption of Web3 technologies.

Ecosystem Partnerships: Aptos collaborates with industry leaders like Google Cloud, Microsoft, and MoonPay, indicating potential for future growth and adoption.

Further Reading and Resources

Website: https://aptoslabs.com/

Developer Documentation: https://aptos.dev/

Twitter: https://twitter.com/Aptos

Telegram: https://github.com/aptos-labs

Github: https://github.com/aptos-labs

Discord: https://discord.gg/aptosnetwork

About Chorus One

Chorus One is one of the biggest institutional staking providers globally, operating infrastructure for 50+ Proof-of-Stake networks, including Ethereum, Cosmos, Solana, Avalanche, and Near, amongst others. Since 2018, we have been at the forefront of the PoS industry and now offer easy enterprise-grade staking solutions, industry-leading research, and also invest in some of the most cutting-edge protocols through Chorus Ventures. We are a team of over 50 passionate individuals spread throughout the globe who believe in the transformative power of blockchain technology.

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