New player enters the liquidity mining arena

New player joins liquidity mining.

One of the hottest topics in 2023 is the liquidity collateralized derivative (LSD). Through the liquidity collateral agreement, you can pledge ETH to ensure network security, give collateral rewards, and get LSD. You can also use LSD in DeFi.

It is well known that Lido is the absolute leader in the field of collateral agreements, but this is mainly due to its first-mover advantage. Today, let’s introduce some other liquidity collateral agreements that are quietly accumulating strength!

1. StaFi

The StaFi Protocol is a decentralized protocol built on the Substrate architecture. Substrate architecture may not be well known to everyone. This is a blockchain architecture developed by Blockingrity. The entire architecture integrates many development modules, including consensus modules, P2P modules, and Staking modules. Avalanche uses the Substrate architecture.

The total amount of ETH pledged in the StaFi network is currently 13598.

StaFi focuses on solving the circulation barriers of assets locked on the chain by focusing on the liquidity of pledged assets.

rToken is a redeemable token for pledged assets issued by the StaFi protocol. Its issuance method is different from Lido. The number of rTokens (Qr) will be determined by the user’s pledged native token quantity (Qs) and the rToken exchange rate (Cr). The specific rule is Qr=Qs/Cr.

Let’s take an example to illustrate: I pledged 10 ETH (Qs=10). If the current pledged sETH exchange rate is 0.01, then the number of sETH I will receive is 10/0.01=1000 sETH.

The public chain networks that this platform currently supports for collateral include Ethereum, Polkadot, Cosmos, etc.

2. Stakewise

The total amount of ETH pledged in the Stakewise network is 81088, and the number of pledgers is 3000.

As another liquidity collateral agreement, the general logic of Stakewise is not different from Lido, but its special point is that it adopts a dual-token model. What does that mean?

In simple terms, the ETH pledged by the user and the corresponding pledge income are separated, which is equivalent to separating the principal and interest, and the corresponding derivatives are sETH2 and rETH2, respectively.

The reason for doing this is mainly to isolate risks and provide better liquidity. Stakewise has recently collaborated with some top protocols, such as building Stakewise’s DAO treasury through the Gnosis platform, and Stakewise has also deployed related services on the Gnosis Chain.

In the upcoming StakeWise V3 version, users will be able to directly destroy their sETH2 and rETH2 in the StakeWise application to claim their underlying ETH and rewards.

Whether it’s Lido, Stakewise, or StaFi, there is still a lot of room for development. Why is this? Please refer to the figure below. Currently, the amount of ETH staked accounts for only 19% of the total amount, while Solana has reached 71%, more than three times that of Ethereum.

This is also because Ethereum has only recently transitioned from PoW to PoS, and naturally the amount of staking is not much. Moreover, as the king of new public chains, Ethereum’s future development is definitely bright. From another perspective, this is also a good advantage for the development of staking protocols. They have enough time to open up their own territory in the market.