Original author: Shenchao TechFlow
As the narrative rotates, the market’s focus gradually turns back to Ethereum.
Vitaliks various research on Ethereum often contains the possibility of leading new hot spots. On December 28, Vitalik published a research blog post exploring how to handle the huge number of signature loads in the Ethereum network without sacrificing decentralization.
(Related Reading:Sticking to 8192 signatures per slot post-SSF: how and why）
At the same time, Vitalik also proposed a solution in his research: using DVT (Distributed Verifier Technology) to build a decentralized pledge pool.
As we all know, after the merger of Ethereum, the consensus mechanism was transformed into POS with a pledge mechanism. At present, several large pledge service providers have monopolized a large amount of market share, which has also raised concerns about the centralization of pledge services.
High performance load, centralization of staking, Vitalik trying to solve the problem... it all goes back to the old narrative of optimizing Ethereum.
(Viewers unfamiliar with DVT can check out this article:After the Ethereum merger, DVT distributed verification technology is crucial）
Regarding DVT, the first project that comes to mind in the market is SSV—the only project using distributed verification technology in the current liquidity staking field, with a market value of only about US$200 million.
However, since the ecosystem on Ethereum is relatively mature, after a technical narrative is rekindled, it is actually a good choice to avoid the crowded investment direction and pursue relatively stable Beta returns.
Therefore, in addition to SSV, a project that can be directly logically thought of, Lido itself is also worthy of attention.
Breaking the stereotype of LDO centralized staking
A classic logical fallacy: Whoever has a higher market share in the liquidity staking track is centralized.
Judging from the data, Lido occupies 30% of the market share and indeed occupies a dominant position. However, market share monopoly and whether the pledge method is centralized are actually two different things.
A high market share can only mean that you are the boss and may be the only one. However, what technical methods the boss uses for staking actually needs to be carefully examined.
Last November, Lido actually used the DVT scheme highlighted by Vitalik to implement a so-called distributed validator. Lido calls this solution Simple DVT Module and is presented byObolNetworkandssv_networkProvide solution support.
Excluding the technical details of the solution, in laymans terms Lido now allows multiple node operators to manage different nodes and jointly reach consensus to complete the responsibilities of the Validator. At the same time, this also provides opportunities for a wider range of node operators to participate, improving the decentralization, distribution and flexibility of the network.
The Simple DVT module now allows individual stakers, community stakers, existing node operators, and other staking organizations to participate in Lido’s testnet, and will subsequently be updated on the mainnet to include a staking network with a richer variety of validators.
Judging from the testnet data, there are more than 300 participants and more than 175 individual and community stakers around the world participating in the testnet, and its node distribution is increasingly decentralized.
Therefore, Lido’s technical changes actually reveal a layer of information: the project is already compatible with the DVT that Vitalik recently mentioned again.
Whether market funds will take the opportunity to speculate requires analysis of Lidos other fundamental data.
Gain insights into data and seek beta benefits
Outside of technology, what about the other fundamentals of Lido?
We all know that Lido is the leader in liquidity staking, accounting for nearly 30% of the staking share. But with such absolute data, there is no way to see its potential or room for financial speculation.
But if you make a set of comparisons, you can easily spot the opportunities:
The ETH pledged in Lido accounts for approximately 8% of the total amount of ETH on the current market; in contrast, the market value of LDO tokens is less than 1% of the total market value of ETH tokens --- market value relative to liquidity The extent of the contribution of sex staking may be underestimated;
A more intuitive comparison is that as Ethereum merges and upgrades, allowing users to withdraw pledged ETH, theoretically the ETH in each liquidity pledge pool will decrease;
However, data from DefiLlama shows that Lido’s TVL will not fall but rise in 2023, which means that users’ ETH pledged through Lido has actually increased.
At the same time, technical analysis from external analysts and KOL shows that LDO is breaking through the resistance level of the last one and a half years, and is also breaking through the downward trend that has been in the past 20 months.
Although pure technical analysis cannot guide investment research, good fundamentals (returning to the DVT narrative) coupled with changes in technical forms actually give market funds a certain reason and space for operations.
Granted, betting on SSV andObolNetworkFor projects with smaller market capitalization, the income that can be obtained may be higher, but it also means drastic changes in token prices.
The renewed mention of DVT technology, the market’s focus on Ethereum’s optimization narrative (such as parallel EVM), and the upcoming Cancun upgrade in the first quarter of this year have actually provided a visible window of opportunity for funds to return to the Ethereum ecosystem. ;
While focusing on low-market value projects, choosing a leader that is closely related to ETH-related tracks may also be a relatively safe and safe choice to gain Beta returns.
After all, in the encryption market, old projects often recover quickly when no one pays attention, and then you will see countless legitimate reasons for this recovery amid information overload.
It is far better to make relatively safe decisions before recovery than to eat fish tail after the public outcry.
