Curation Strategy for Restaking Vaults on Symbiotic

Untangled Credio is launching an OETH restaking vault on Symbiotic, a protocol enabling assets like Origin Ether (OETH) to secure multiple networks simultaneously. Stakers deposit OETH to earn its intrinsic yield (from liquid staking and DeFi) plus additional rewards from restaked networks. The vault aims to maximize risk-adjusted returns by dynamically allocating OETH across high-reward networks while managing slashing risks. This post outlines the vault’s strategy, covering network selection, reallocation logic, risk management, and governance.

You could access the vault here:  Untangled Credio x OETH Vault 

Since the launch in June 2023, restaking has rapidly evolved into a fully-fledged competitive sector. Restaking protocols like Eigen Layer, Symbiotic and Karak allow users to leverage Ethereum’s security by restaking their ETH and liquid staking tokens (LSTs) across multiple decentralized services (or networks).

Operators (or Actively Validated Services/AVSs) are essential in the restaking ecosystem, using restaked assets like OETH and liquid staking tokens to secure decentralized services through restaking protocols. By tapping into Ethereum’s validator set for pooled security, operators enhance the network's robustness and offer additional yield for restakers. This creates a mutually beneficial system where restakers earn more, while decentralized applications gain cost-effective security, driving both ecosystem growth and yield generation.

Symbiotic provides a modular and flexible framework for restaking:

• Vaults (with curator) delegate any collaterals (ERC20) to networks via operators with one of the following models: (1) Multiple networks, multiple operators (2) Multiple networks, single operator (3)Single network, multiple operators and (4) Single network, single operator

• Single-token vaults comprise mainly of ETH/ETH derivatives, wBTC and some yielding stablecoins. Thus most of the collaterals are volatile.

• So far there are around 70 vaults, 66 operators providing economic security to 15 networks

The vault targets high-yield opportunities, including “slashable” networks that offer higher returns but risk collateral loss, and safer, non-slashable networks with lower yields. Key objectives include:

• Diversifying across networks and operators to spread risk.

• Capping exposure to high-risk networks to limit worst-case losses.

• Maximizing risk-free yields from non-slashable networks.

• Monitoring on-chain (e.g., validator uptime, slashing events) and off-chain signals for real-time adjustments.

The vault selects networks using a rigorous framework:

• Technical Risk Assessment: Evaluates network smart contracts, slashing mechanics, and audits to score software risk, incorporating external analyses and Credio’s risk oracle.

• On-Chain Metrics: Tracks validator uptime, missed blocks, slashing history, and reward rates. Networks with strong performance and sustainable yields are prioritized.

• Off-Chain Signals: Uses risk models from Credio, assessing governance, communication, and community trust. Networks with poor governance (e.g., centralized control) are avoided.

• Yield Potential: Prioritizes high-APR networks with acceptable risk. Non-slashable networks (e.g., Radius, Ditto, Kalypso) are fully allocated for safe yield, while slashable networks (e.g., Primev, Hyperlane) start with small, conservative stakes.

OETH’s yield-bearing nature and liquidity make it ideal collateral, boosting overall APY by combining ETH staking returns with Symbiotic rewards.

The vault adjusts OETH allocations in real-time using:

• Yield Tracking: Shifts stake to higher-yield networks if risk is acceptable, or away from underperforming ones.

• Slashing Risk Signals: Automatically reduces exposure via a “delegator hook” if slashing occurs or validators show issues (e.g., downtime).

• Periodic Rebalancing: Weekly resets to target allocations based on yield and risk updates.

• Allocation Caps: Limits slashable network exposure (e.g., 20% max per risky network) to prevent over-concentration.

• Validator Downtime: Reduce stake if uptime drops.

• Slashing Event: Withdraw stake immediately.

• Yield Spike/Drop: Adjust allocations to capture or avoid opportunities.

• Risk Downgrade: Scale back if a network’s risk score worsens.

• New Network: Trial small stakes in vetted networks.

To mitigate slashing:

• Diversification: Spreads OETH across multiple networks and 3–5 reputable operators.

• Slashing Caps: Sets maximum loss per network (e.g., 5% of vault).

• Monitoring: Tracks on-chain data and off-chain signals (e.g., governance changes) with alerts for quick action.

• Risk Scoring: Excludes high-risk networks; limits stake to riskier ones.

• Simulations: Stress-tests allocations to minimize worst-case losses.

No slashing has occurred on Symbiotic mainnet, but the vault is designed to prevent and respond to such events.

The Untangled Credio OETH vault balances high yields with disciplined risk management. Key steps include:

• Launch Mix: Maximize non-slashable networks; allocate small stakes to vetted slashable networks (e.g., Primev, Hyperlane).

• Operators: Onboard multiple high-quality operators with slashing limits.

• Safeguards: Enable delegator hooks, set slashing caps, and deploy real-time monitoring.

• Dynamic Tuning: Test and refine rebalancing logic; adjust caps as performance data emerges.

• Transparency: Share weekly reports on allocations, yields, and risks.

This strategy positions the vault to outperform vanilla staking while safeguarding depositors, with ongoing refinements as Symbiotic evolves.

Ethereum blockchain has just one single stake token - ETH - but a network on Symbiotic has to deal with multiple delegated collaterals, making it complex for optimisation. This vault will change that. Untangled Credio x OETH Vault brings risk-adjusted restaking yield to OETH deposits with a novel mechanism to abstract all collateral delegations to a network into a single token - Synthetic Stake Token - enabling new opportunities for networks and stakers to optimize risk/reward.

Current implementation requires networks to deal with fragmented collaterals, making it complex to optimise cost/benefit

• Complexity: Networks and operators have to deal with many collateral tokens which change at every epoch.

• Collateral Variability: Tokens exhibit diverse risk profiles (e.g., price volatility, staking variance, increasing cascade risk  and threatening network stability.

• Reward: Fixed or arbitrarily set reward rates many fail to reflect token-specific risks or network demand, leading to inefficiencies.

We propose Synthetic Stake Token (SST) to abstract all collateral delegations into a single token

• Aggregates delegations into one SST per network.

• SST represents a share of total delegation.

• Enables dynamic rebalancing and a unified interface.

How it works

• Operators stake into networks and receive SST, representing their share of the network’s total delegated stakes.

• All collaterals are converted to their dollar value. This allows for fair valuation of operators' stakes, regardless of the asset type they are staking.

• Staking contracts must be connected to an oracle to quote the real-time price of each collateral asset.

Untangled is working with Symbiotic to implement SST layer.

Curation Strategy for Restaking Vaults on Symbiotic

Untangled Credio is launching an OETH restaking vault on Symbiotic, a protocol enabling assets like Origin Ether (OETH) to secure multiple networks simultaneously. Stakers deposit OETH to earn its intrinsic yield (from liquid staking and DeFi) plus additional rewards from restaked networks. The vault aims to maximize risk-adjusted returns by dynamically allocating OETH across high-reward networks while managing slashing risks. This post outlines the vault’s strategy, covering network selection, reallocation logic, risk management, and governance.

You could access the vault here:  Untangled Credio x OETH Vault 

Since the launch in June 2023, restaking has rapidly evolved into a fully-fledged competitive sector. Restaking protocols like Eigen Layer, Symbiotic and Karak allow users to leverage Ethereum’s security by restaking their ETH and liquid staking tokens (LSTs) across multiple decentralized services (or networks).

Operators (or Actively Validated Services/AVSs) are essential in the restaking ecosystem, using restaked assets like OETH and liquid staking tokens to secure decentralized services through restaking protocols. By tapping into Ethereum’s validator set for pooled security, operators enhance the network's robustness and offer additional yield for restakers. This creates a mutually beneficial system where restakers earn more, while decentralized applications gain cost-effective security, driving both ecosystem growth and yield generation.

Symbiotic provides a modular and flexible framework for restaking:

• Vaults (with curator) delegate any collaterals (ERC20) to networks via operators with one of the following models: (1) Multiple networks, multiple operators (2) Multiple networks, single operator (3)Single network, multiple operators and (4) Single network, single operator

• Single-token vaults comprise mainly of ETH/ETH derivatives, wBTC and some yielding stablecoins. Thus most of the collaterals are volatile.

• So far there are around 70 vaults, 66 operators providing economic security to 15 networks

The vault targets high-yield opportunities, including “slashable” networks that offer higher returns but risk collateral loss, and safer, non-slashable networks with lower yields. Key objectives include:

• Diversifying across networks and operators to spread risk.

• Capping exposure to high-risk networks to limit worst-case losses.

• Maximizing risk-free yields from non-slashable networks.

• Monitoring on-chain (e.g., validator uptime, slashing events) and off-chain signals for real-time adjustments.

The vault selects networks using a rigorous framework:

• Technical Risk Assessment: Evaluates network smart contracts, slashing mechanics, and audits to score software risk, incorporating external analyses and Credio’s risk oracle.

• On-Chain Metrics: Tracks validator uptime, missed blocks, slashing history, and reward rates. Networks with strong performance and sustainable yields are prioritized.

• Off-Chain Signals: Uses risk models from Credio, assessing governance, communication, and community trust. Networks with poor governance (e.g., centralized control) are avoided.

• Yield Potential: Prioritizes high-APR networks with acceptable risk. Non-slashable networks (e.g., Radius, Ditto, Kalypso) are fully allocated for safe yield, while slashable networks (e.g., Primev, Hyperlane) start with small, conservative stakes.

OETH’s yield-bearing nature and liquidity make it ideal collateral, boosting overall APY by combining ETH staking returns with Symbiotic rewards.

The vault adjusts OETH allocations in real-time using:

• Yield Tracking: Shifts stake to higher-yield networks if risk is acceptable, or away from underperforming ones.

• Slashing Risk Signals: Automatically reduces exposure via a “delegator hook” if slashing occurs or validators show issues (e.g., downtime).

• Periodic Rebalancing: Weekly resets to target allocations based on yield and risk updates.

• Allocation Caps: Limits slashable network exposure (e.g., 20% max per risky network) to prevent over-concentration.

• Validator Downtime: Reduce stake if uptime drops.

• Slashing Event: Withdraw stake immediately.

• Yield Spike/Drop: Adjust allocations to capture or avoid opportunities.

• Risk Downgrade: Scale back if a network’s risk score worsens.

• New Network: Trial small stakes in vetted networks.

To mitigate slashing:

• Diversification: Spreads OETH across multiple networks and 3–5 reputable operators.

• Slashing Caps: Sets maximum loss per network (e.g., 5% of vault).

• Monitoring: Tracks on-chain data and off-chain signals (e.g., governance changes) with alerts for quick action.

• Risk Scoring: Excludes high-risk networks; limits stake to riskier ones.

• Simulations: Stress-tests allocations to minimize worst-case losses.

No slashing has occurred on Symbiotic mainnet, but the vault is designed to prevent and respond to such events.

The Untangled Credio OETH vault balances high yields with disciplined risk management. Key steps include:

• Launch Mix: Maximize non-slashable networks; allocate small stakes to vetted slashable networks (e.g., Primev, Hyperlane).

• Operators: Onboard multiple high-quality operators with slashing limits.

• Safeguards: Enable delegator hooks, set slashing caps, and deploy real-time monitoring.

• Dynamic Tuning: Test and refine rebalancing logic; adjust caps as performance data emerges.

• Transparency: Share weekly reports on allocations, yields, and risks.

This strategy positions the vault to outperform vanilla staking while safeguarding depositors, with ongoing refinements as Symbiotic evolves.

Ethereum blockchain has just one single stake token - ETH - but a network on Symbiotic has to deal with multiple delegated collaterals, making it complex for optimisation. This vault will change that. Untangled Credio x OETH Vault brings risk-adjusted restaking yield to OETH deposits with a novel mechanism to abstract all collateral delegations to a network into a single token - Synthetic Stake Token - enabling new opportunities for networks and stakers to optimize risk/reward.

Current implementation requires networks to deal with fragmented collaterals, making it complex to optimise cost/benefit

• Complexity: Networks and operators have to deal with many collateral tokens which change at every epoch.

• Collateral Variability: Tokens exhibit diverse risk profiles (e.g., price volatility, staking variance, increasing cascade risk  and threatening network stability.

• Reward: Fixed or arbitrarily set reward rates many fail to reflect token-specific risks or network demand, leading to inefficiencies.

We propose Synthetic Stake Token (SST) to abstract all collateral delegations into a single token

• Aggregates delegations into one SST per network.

• SST represents a share of total delegation.

• Enables dynamic rebalancing and a unified interface.

How it works

• Operators stake into networks and receive SST, representing their share of the network’s total delegated stakes.

• All collaterals are converted to their dollar value. This allows for fair valuation of operators' stakes, regardless of the asset type they are staking.

• Staking contracts must be connected to an oracle to quote the real-time price of each collateral asset.

Untangled is working with Symbiotic to implement SST layer.