Overview
Collateral in Symbiotic is a way to make capital more efficient and scalable. It allows assets used to secure the Symbiotic network to exist outside the main protocol— such as being held in staking programs or liquidity pools on networks like Solana or Avalanche.
This works by separating the slashing function from the asset itself, much like how liquid staking derivatives create tokenized versions of staked assets. In Symbiotic, collateral takes the form of ERC-20 tokens with extra features to handle slashing events when necessary. Simply put, if an asset can be slashed, there needs to be a Burner mechanism that properly destroys the asset.
Examples include:
If the asset is an ETH-backed staking token, it can serve as collateral if there's a Burner contract that can withdraw ETH from the Beacon Chain and burn it.
A native governance token can also serve as collateral, provided the Burner mechanism can transfer it to an unrecoverable address or another mechanism that guarantees the token is permanently removed from circulation.
Collateral in Action
In the Symbiotic ecosystem, collateral tokens are placed into vaults, which are responsible for distributing them to operators across multiple networks supported by Symbiotic. Vaults define the acceptable collateral and, if slashing is enabled, the related Burner process. Networks need to agree to these terms, including slashing limits, in order to accept staked collateral. You can find more details about this process in the Vaults section.
Technical Details
We don’t prescribe a fixed implementation for collateral tokens, but they must meet a few basic requirements:
The token must support the ERC-20 interface.
[Optional] The token should be slashable, meaning it can either be a native asset or a derivative that can be redeemed for the underlying asset. This is only needed if the collateral is part of a vault with slashing enabled.
Default Collateral
The Default Collateral represents a straightforward and minimal version of a collateral token. In essence, it acts as a lightweight layer around any standard ERC-20 token, with the optional capability to log or monitor slashing-related activity over time. While this extra functionality isn’t strictly necessary in all situations, it can be included when the use case is more advanced or when additional tracking is useful.
Author = Mokolola