Analysis of the five major forms of LSDFi: Liquid Staking Derivation in the DeFi ecosystem panorama

LSDFi is a DeFi product based on LSD, which converts staked ETH into tradable assets through LSD, unlocking liquidity while lowering the staking threshold. Behind LSDFi is DeFi Lego, where new projects attract users to stake ETH/LSD through incentives to gain market share and LSD control. Some projects use dynamic yield rates to encourage users to choose smaller decentralized staking platforms, promoting the decentralization of validators.

LSDFi has five main forms:

1. LP ( yield 10%+)

Based on the LSD-ETH Liquidity Pool, in addition to earning staking rewards, there are also LP fee rewards. After the Shanghai upgrade, the LP scale may increase.

2. Cycle lending ( yield 10%+)

Use platforms like AAVE to cycle borrow ETH and STETH, leveraging staking returns. The liquidation risk is higher, and the APR depends on the number of cycles.

3. Yield (10%+)

For example, Yearn Finance establishes a liquidity pool on Curve, aggregates yields from multiple platforms, and provides subsidies to increase LSD APY.

4. EigenLayer ( unknown收益)

Provide liquidity staking and ultra liquidity staking, supporting the re-staking of LSD and LSD LP.

5. Incentive LSDFi projects

Improve capital efficiency through leverage, derivatives, etc., or attract savings with high APY. For example:

Pendle: provides staking services for ETH and others, as well as liquidity pools, with high discounts and subsidized returns.

Ion Protocol: Tokenizing LSD into allETH and vaETH, expected to collaborate with multiple DeFi protocols.

unshETH: Promote validator decentralization through dynamic reward allocation, supporting various LSD.

LSDx Finance: Aims to become a DEX for LSD assets, establishing a unified liquidity pool ETHx using a GLP-like architecture.

Liquid Staking Derivatives: LSD aggregator, maximizing asset leverage through tokenization and derivatives.

Stader Ethereum: ETHx is coming soon and will cooperate with multiple Decentralized Finance protocols.

Hord: Achieve a high APR through staking, MEV rewards, and token subsidies.

Parallax Finance: Providing liquidity infrastructure on L2, including stake, leverage, and lending services.

bestLSD: Real Yield aggregator, utilizing aggregated yield to subsidize its own LSD.

0xAcid DAO: a management protocol for maximizing LSD asset returns, using diversified strategies.

Projects such as EigenLayer, Index Coop, and Gitcoin have also launched related products and services.

Overall, the LSDFi project is vying for the discourse power of LSD, and high yields may become the norm. The choice of strategy requires weighing returns against risks, and the impact of LSDFi on validators' Decentralization remains to be observed. There is room for collaboration among projects, and different risk-return levels of products may emerge in the future. The LSD War may continue until the Ethereum stake rate stabilizes above 25%.