LSDfi Summer: What is LSDfi and an overview of the LSDfi ecosystem.
LSDfi Summer: Introduction to LSDfi and its ecosystem.
Recently, with the outbreak of several LSDfi protocols, such as Lybra Flnance TVL and its token LBR increasing 40 times in a month, many people are saying LSDfi Summer is here.
So, what is LSDfi? Why is it said to be about to explode? What projects are in the LSDfi ecosystem?
Crypto KOL Yugi Ai summarized the above content in a long tweet. Blockingcryptonaitive translated the tweet for readers to learn.
What is LSDfi?
LSDfi is the most promising narrative in LSD and the entire DeFi. If you are interested in learning what it is and what projects it contains, please see my post.
This post includes 6 parts: 1. LSDfi; 2. Classical DeFi; 3. LSD basket; 4. Revenue strategy; 5. LSD stablecoin; 6. Conclusion.
- Revisiting the legitimacy of Crypto: The ideological divide between...
- Analysis of Worldcoin: What is it, how to use it? How to protect pr...
- Listing 5 profitable LSD protocols: ushETH, LSDx Finance, ZeroLiqui...
1. LSDfi
This refers to a set of protocols based on LSD. These may include classic DeFi protocols such as DEX and lending, as well as more complex protocols that utilize unique LST properties. As LST is more widely adopted, they will play an important role in DeFi.
The Liquid Staking project lays the foundation for DeFi. The next layer includes projects built on LSD to create more complex products.
LSD has become the main category of TVL, with Lido becoming the largest project. Therefore, LSD plays a crucial role in driving the development of the entire DeFi ecosystem.
DeFi integration is an important trend in the LSD field. LSDfi is actually the result of this evolution. As this trend continues to develop, LSD is becoming one of the main forces in DeFi.
Now, LSDfi has developed into a complete track in DeFi and is actively developing. This includes not only classic DeFi protocols, but also more complex protocols. For example, baskets, stablecoins, revenue strategies, etc.
2. Classical DeFi
LSD has long been an indispensable part of classical DeFi. Many LSTs can be used as collateral and traded on DEX.
Examples of LST in classical DeFi: stETH as collateral in Aave; pools in Curve; and vaults in yearnfi.
As LSD becomes more popular, we can expect the emergence of DEXs or aggregators tailored specifically for LSD. Some LSD-focused protocols include LSDx Finance, similar to Curve, and Cat-in-a-Box Finance as a lending protocol.
3. LSD Basket
There are many liquid staking solutions for ETH, so there is logically a protocol that can combine them into a basket, creating an index. This approach allows for risk diversification and makes investing in LSD more convenient.
LSE Basket:
Indexcoop: Introduces two LSD indexes – dsETH and icETH, with dsETH containing top-tier ETH LST and icETH using leverage.
Unsheth: Launches UnshETH, a basket containing top-tier ETH LST.
Asymmetry Finance: Deposits ETH and receives safETH-backed bt TOP3 LST.
4. Yield Strategies
LSD is a token that generates continuous returns. Naturally, users can devise strategies around it. For example, allocating it to different pools, using it as collateral, leveraging it, and managing staking rewards.
Yield Strategy Protocols
0xAcidDAO: Enables users to invest ETH in diversified baskets derived from raw LST and various strategies.
Blockingrallax Finance: A leveraged LSD yield strategy platform that aims to integrate numerous LST.
Pendle offers another unique approach: It is a platform to buy futures. Users can purchase ETH at a discount and receive it later while investing it in specified LST.
Asymmetric yield: Asymetrix.eth is a protocol for asymmetric yield distribution generated through staking. This is similar to a lottery where some winners share all of the betting rewards for that period. The inspiration comes from Premium Bonds, following a similar logic.
5. LSD Stablecoins
Using LSD for over-collateralized stablecoins is a very logical choice. LSD will continue to generate income from staking, making these stablecoins yield-bearing. In this case, everything is backed by ETH.
LSD-backed stablecoins: eUSD by Lybra Finance; aUSD by Aagility; R by Raft.
6. Conclusion
LSD has become the standard for any PoS ecosystem and is one of the main trends in DeFi. LSD generates consistent, low-risk passive income and helps maintain the blockchain.
LSDfi is the logical extension of LSD. It creates a complete economy that generates significant income on one hand and simplifies interaction with the LSD project on the other.
LSDfi will continue to evolve, and we will witness an increase in the complexity and uniqueness of the project. Let’s observe its future development.
