Original author:waynezhang.eth

Original author:

LSDFi is a DeFi product based on LSD. Through LSD, pledgers can convert the pledged ETH into a tradable asset, thereby unlocking liquidity, and LSD also lowers the threshold for users to pledge ETH. Any amount can be pledged, and LSD can be obtained after staking, and at the same time, LSD can be used to bring multiple benefits.

Behind LSDFi is DeFi Lego, and behind the combination of DeFi is income Lego. New entrants will use bribes/obtain third-party tokens or use their own tokens for incentives, and then encourage users to pledge ETH/LSD to their own platforms. So as to absorb market share and LSD control. Some LSDFi projects use variable incentive multipliers or dynamic rate of return to encourage users to pledge on small decentralized pledge platforms to obtain LSD, so as to achieve the goal of more decentralization of verifiers.

Here are the five forms of LSDFi:

1. LP (income 10% +)

Before the Shanghai upgrade, LSD could not be directly exchanged into ETH, so many DeFi established corresponding LSD-ETH liquidity pools. From the perspective of stETH, the basic income did not exceed 5%. The basic method is to use Token subsidies to increase APY. Get the network rewards obtained by staking ETH, and you can also get LP fee rewards. I personally think that due to the increase in the base of LSD, the scale of LPs may not decrease but increase after the upgrade in Shanghai.

2. Revolving loan (yield 10%+)

• STETH through AAVE and LIDO made billions of leveraged bets on the mainnet activation after the merger of Ethereum.

• Pledge ETH in LIDO to exchange for STETH;

• Deposit STETH into AAVE and borrow ETH;

Cycle through the above operations;

3.Yield（10% +）

The risk of liquidation is a bit high. This APR depends on how many times you have circulated. In theory, any loan agreement can be done, and there will be automatic revolving loan products.

Yearn Finance has built a liquidity pool on Curve, which can increase the LSD APY to 5.89%. You can choose to directly pledge stETH. The current pool is worth 16.4 million US dollars. There are many similar old projects, which can be increased by aggregating the income of multiple platforms + subsidies income.

The old DeFi represented by Yearn wants to get involved in the LSD industry, which also reflects the importance of the LSD track.

4. EigenLayer (revenue unknown)

• EigenLayer provides a variety of staking methods, including Lido-like Liquid Staking and Superfluid Staking, where Superfluid Staking can allow LP pairs to pledge, specifically:

• LSD pledge, the assets already pledged in Lido or Rocket Pool are pledged to EigenLayer again;

LSD LP pledge, such as Curve's stETH-ETH LP Token pledged to EigenLayer again;

5. Incentive LSDFi project

• Pendle：Improve capital efficiency through leverage, structured strategies, options, bond derivatives, etc., or use extremely high APY to attract savings or achieve other purposes.

A DeFi income agreement, in which users can implement various income management strategies, start out as derivatives, and provide pledge services such as ETH, APE, LOOKs and liquidity pools. To put it simply, you can buy ETH at a current price of $1,800 at $1,600, and the difference of 10% is your income (you need to lock it for 466 days), and you can also gain income by adding liquidity.

• The income of its liquidity pool is currently established on Lido or Aura, and after a certain period of time, it will receive the income subsidized by Pendle. The current income is quite impressive, the discounted price (lock-up period of about one year) is 12.5%, and the annualized income put into the Pool is about 95.7%, but note that most of the high APY is subsidized in the form of PENDLE tokens.

• TVL: $38.44 million;

• Market cap: $32.8 million;

• Ion Protocol：FDV: $78.54 million;

Item is not live. The principle is to tokenize LSD tokens and mortgageable assets into allETH and vaETH. allETH is an ERC-20 token, 1 ETH = 1 allETH. vaETH tracks all returns earned on allETH positions.

• unshETH：The project will also use EigenLayer, etc. to aggregate LSD revenue, and no further information has been disclosed yet. Early project, Twitter followers: 266, Discord: 38.

The protocol that improves the degree of decentralization of verifiers through the dynamic allocation of incentives is simply to give higher rewards to LSD with low market share, and to give less rewards to LSD after pledge to top LSD platforms such as Lido and Coinbase, so that everyone will Because of the high rewards, choose to pledge ETH on a small share platform, so as to achieve the purpose of promoting centralization.

• Currently unshETH only supports sfrxETH, rETH, wstETH, cbETH, which is still far away from its own goal of de-centralization:

• TVL: $8 million;

FDV: USD 20 million;

• LSDx Finance：Direct pledge requires a certain lock-up period. You need to pledge LSD/ETH to the platform to exchange it into unshETH. Pledging unshETH will get about 500% of the income, and tokens can be further pledged to obtain about 70% of the income. The current depth of LP Pool is about 580,000 In US dollars, the fee income of the group LP is 60%. If you pledge on the platform, you will get 666% + APY incentives. But I haven't found more utility of the token, but I think if he can adopt veToken, it will be easier to achieve his goal if his reward multiplier is determined by USH DAO.

The goal of LSDx Finance is to become a DEX with high barriers like Curve in the LSD asset segment (such as stETH, FrxETH, and rETH), effectively occupying the market share of LSD asset liquidity. It adopts a GLP architecture similar to GMX, and built a unified liquidity pool: ETHx, and plans to launch the stable currency UM.55,000 ETHs were locked in 48 hours, 8,000 followers were added in 2 days, tokens were listed on Bitget and MEXC, announced today byForesight Ventures Investment

, it can be seen that the team is fully prepared.

Market Cap: $2.21 million

TVL: $134 million

• Liquid Staking Derivatives：Currently, the number of supported LSDs is relatively small, and the functions have not been fully developed, so there is still a lot of room for expectation. Please note that the 14 days after the 16th will be the creation mining stage, and the rewards will be halved for the first time in 4 days:

An LSD aggregator that solves liquidity issues and maximizes the leverage of assets by tokenizing deposited assets and issuing derivative tokens. Users pledge ETH or LSD to obtain token rewards. The reward token LSD can be used for veLSD governance decisions or LS-ETH liquidity DEFI venture capital. Community members who voluntarily lock LSD will receive a multiplier of the pledged ETH rewards.

• Stader Ethereum：Direct pledge of ETH to get LS-ETH can get 6.3% APR. The official website shows that only 1.24 ETH is pledged, which is very early. The LSD liquidity pool is built on Uniswap V2, worth about $400,000, FDV: $5.68 million.

ETH products are not yet online. I used to do liquidity staking on other chains, and I will release ETHx soon. When the user deposits ETH, the Stader Pools Manager will mint ETHx in return and deposit ETH into three different pools (each pool is equivalent to a verification node but with different technologies: personal 4 ETH operation, DVT technical support, cooperative operation business). ETHx is expected to cooperate with 30+ DeFi protocols including Aave, Balancer, Qi Dao, etc. to release composability.

• To run a node, each validator must deposit 4 ETH and 0.4 ETH worth of SD tokens as collateral (up to 8 ETH of SD). To incentivize node operators, Stader will issue SD tokens worth approximately $1-2 million to validators in the first year. Nodes also earn a 5% commission from other user rewards.

• TVL: $125 million;

• Hord：FDV: $181.7 million;

1. Stake ETH to get LSD hETH. Rewards are accumulated in the staking pool, increasing the value of hETH over time. And the project has achieved higher APR through a variety of ways:

2. ETH pledge

3. MEV rewards

HORD subsidy

• Parallax Finance：The current APY is 17.9%, the number of pledges is 223.22 ETH, there are 57 pledgers, and the FDV is 12.8 million US dollars.

• bestLSD：Provides liquidity infrastructure to enable individuals, DAOs, and other protocols to generate yield on L2 (currently only listed on Arbitrum). It is currently in the testing stage, and you need to obtain Tester qualification to use it. Regarding LSDFi, its product Supernova can not only give users pledge rewards, but also provide leverage and lending services for pledged assets (the currency has not yet been issued, and you can apply for test qualifications).

• 0x Acid DAO：A management protocol that maximizes the return on LSD assets, coming soon to Arbitrum and Ethereum. The main strategy is as shown in the figure below. Put most of the assets on stable nodes, and put some of them into high-yield strategies such as Frax and Aura LP Pool with token subsidies. Today, they announced that they will cooperate with Pendle to leverage income, and they have their own loans, LP Waiting for service, more can clickhere。

here

TVL： 4800 ETH；

Token price: $1296.95, FDV: $9.48 million;

wstETH： 11.54% -29.73% ；

ETH Yield (in bond form): 13.6% discounted price;

EigenLayer：esACID: 3432.36% -10297.10% (very high);

• Engenlayer has already mentioned it, here are some potential DeFi Lego possibilities:

• After LSD is pledged, whether to obtain LP or LSD of LSDs can continue to form LP with ETH/LSD for pledge;

• Re-staking leveraged income;

Index Coop：Automatic leverage Re-staking strategy;

• A decentralized cryptocurrency index community initiated by Set Protocol. There are mainly two LSDFi-related products issued:

• dsETH (Diversified Staked ETH Index): At launch, dsETH will consist of rETH, wrapped stETH and sETH 2. A diverse set of liquid collateral tokens in dsETH reduces the risk associated with individual tokens and stabilizes token-wide returns, with the system automatically adjusting the ratio of different assets in dsETH to maintain an ideal balance and optimize returns;

icETH is a leveraged liquidity staking strategy product, which mainly uses AAVE v2 to provide higher ETH returns;

• Gitcoin：The Gitcoin Staked ETH Index (gtcETH) launched in cooperation with Index Coop. The income of gtcETH comes from the income of the ETH/LSD/USDC pledged by users in their respective strategy pools. Gitcoin and Index Coop will collect 2% of it. 1.75% will be donated to public goods, which also allows us to see new utility scenarios, current supply: 113.85 ETH.

Summarize

Summarize

Many projects of the incentive LSDFi type are vying for a right to speak: who can get more LSD, which will directly determine the number of their future cooperation projects and the DeFi Lego built on it. Similar to many DeFi subdivision industries, the last few players may be left to the end, and Lido's dominant position may also be destroyed;

The stability of the strategy is the spear and shield of the LSDFi project, and the income can only be a spear at present. High income may bring sustainability problems, but high income may be the norm for a long time. In the future, 100% + APY will not not very high;

What strategy is more suitable, only in terms of income, pledged on Liquidity Stkaking Providers other than Top 3, such as frxETH, first use Frax’s income subsidy to get 10% income, and then look for projects that use incentives to promote verification centralization, such as unshETH , LSDx with an APY of several hundred+ will be mined, then sold directly at a high point, and continue to the next one. Of course, if you are good at using the loan agreement, the APY may actually increase to 1000% + (but the risk is very high, and it is easy to lose your own ETH);

LSDfi has little impact on verifiers, LP + token subsidy is the current mainstream, but LSD War will actually increase the degree of decentralization of verification in the later stage

There is a lot of room for cooperation between LSDFi projects, such as the cooperation between 0x ACID and Pendle. Under the combination of future composability, products of various income levels may be formed: divide each risk and income level from 4% -500% +;