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The LSDFi hot war escalates with five strategies aimed at high returns.
LSDFi War Intensifies, 5 Strategies Yield Excess Returns
LSDFi is a DeFi product based on LSD, which allows staked ETH to be converted into tradable assets through LSD, unlocking liquidity and lowering the staking threshold. Any amount of ETH can be staked to obtain LSD, enabling multiple returns from the use of LSD.
The core of LSDFi is the composability of DeFi, where new projects attract users to stake ETH/LSD through incentives to gain market share and control over LSD. Some projects utilize dynamic incentive mechanisms to promote the decentralization of validators.
The following are the five main forms of LSDFi:
1. LP ( Yield 10% + )
Before the Shanghai upgrade, LSD could not be directly exchanged for ETH, which led to the emergence of many LSD-ETH liquidity pools. Taking stETH as an example, the basic yield generally does not exceed 5%, mainly increasing the APY through token subsidies. Stakers can earn ETH staking rewards and LP fee rewards. After the Shanghai upgrade, the LP scale may further increase.
2. Circular Lending ( yield 10% + )
A large-scale leveraged bet on the Ethereum mainnet after the merge using stETH from AAVE and LIDO:
The liquidation risk is relatively high, and the returns depend on the number of cycles. In theory, all lending protocols can be implemented, and automated cyclical lending products may emerge in the future.
3. Yield (10%+)
Yearn Finance has established a liquidity pool on Curve, raising the LSD APY to 5.89%. Users can directly stake stETH, and the current pool value is $16.4 million. There are many similar established DeFi projects that increase yields by aggregating returns from multiple platforms and providing subsidies.
4. EigenLayer (收益未知)
EigenLayer offers various staking methods, including:
5. Incentive LSD Fi Projects
Improve capital efficiency through leverage, structured strategies, options, bond derivatives, etc., or attract savings using high APY.
Pendle
DeFi yield protocols allow users to execute various yield management strategies. They provide staking services and liquidity pools for ETH, APE, LOOKs, etc. Users can purchase ETH below the market price, with the price difference being the profit (, which must be locked for 466 days ). Additionally, users can earn profits by adding liquidity.
Currently, by establishing a pool on Lido or Aura and locking it for a certain period, you can obtain high returns subsidized by Pendle. The discounted price ( is approximately a one-year lock-up period of 12.5%, with a pool annualized return of about 95.7%, but the high APY mainly comes from PENDLE token subsidies.
![LSDFi War continues to heat up, detailed explanation of 5 strategies for generating excess returns])https://img-cdn.gateio.im/webp-social/moments-835b0a86404055676b76acd3fe7f33b3.webp(
) Ion Protocol
The project is not online yet. The principle is to tokenize LSD tokens and collateralized assets into allETH and vaETH. allETH is an ERC-20 token, 1 ETH = 1 allETH. vaETH tracks all the profits earned from allETH positions.
The plan is to leverage EigenLayer and others for LSD yield aggregation, currently, information is limited. It is in the early stages, with 266 followers on Twitter and 38 people on Discord.
![LSDFi War continues to heat up, detailed explanation of 5 strategies to generate excess returns]###https://img-cdn.gateio.im/webp-social/moments-8ca7bec7c31708df1cc9a9df2fc2b4b7.webp(
) unshETH
A protocol that enhances the decentralization of validators through dynamically allocated incentives. It provides higher rewards for LSDs with lower market shares, while leading LSD platforms offer fewer staking rewards, to encourage users to stake ETH on smaller share platforms.
Currently, only sfrxETH, rETH, wstETH, cbETH are supported, and the goal of decentralization is still far away:
Staking unshETH can yield approximately 500% returns, and further staking of the tokens can yield about 70% returns. The LP Pool depth is about $580,000, with 60% of the LP fee income, and staking can earn 666%+ APY incentives.
![LSDFi War continues to heat up, detailing 5 strategies to generate excess returns]###https://img-cdn.gateio.im/webp-social/moments-53fec1837985059610cfa6854fca60b9.webp(
) LSDx Finance
The goal is to become a high-barrier DEX in the LSD asset segmentation market, capturing market share in LSD asset liquidity. By adopting a GLP architecture similar to GMX, a unified liquidity pool ETHx will be established, and a stablecoin UM is planned to be launched.
48-hour lock-up of 55,000 ETH, 8,000 followers added in 2 days, tokens launched on Bitget and MEXC. Recently received investment from Foresight Ventures.
Currently, the number of supported LSDs is limited, and not all functions have been completed. The genesis mining will halve for the first time in 4 days.
![LSDFi War continues to heat up, detailed explanation of 5 strategies to generate excess returns]###https://img-cdn.gateio.im/webp-social/moments-36a549877dd9363e1a3d39c2d9edb9f8.webp(
) Liquid Staking Derivatives
LSD Aggregator solves liquidity problems and maximizes asset leverage through tokenization and issuance of derivative tokens. Users stake ETH or LSD to earn token rewards, and the reward tokens LSD can be used for veLSD governance or LS-ETH liquidity DeFi investments.
Directly stake ETH to obtain LS-ETH with an APR of 6.3%. Currently, only 1.24 ETH is staked, which is in the early stages. The LSD liquidity pool is built on Uniswap V2, with a value of about $400,000. FDV: $5.68 million.
![LSDFi War continues to heat up, detailed explanation of 5 strategies for generating excess returns]###https://img-cdn.gateio.im/webp-social/moments-35b432218c6e5513d967c988518875dd.webp(
) Stader Ethereum
The ETH product is not yet launched. Previously, liquid staking was provided on other chains, and ETHx is about to be released. When users deposit ETH, the Stader Pools Manager mints ETHx as a reward and deposits the ETH into three different pools ### equivalent to validation nodes (. ETHx is expected to collaborate with over 30 DeFi protocols.
Running a node requires a deposit of 4 ETH and SD tokens worth 0.4 ETH as collateral. In the first year, 1 to 2 million USD worth of SD tokens will be granted as incentives to node operators. Nodes can earn a 5% commission from rewards from other users.
![LSDFi War continues to heat up, detailed explanation of 5 strategies for generating excess returns])https://img-cdn.gateio.im/webp-social/moments-04b182b48be746ec51e19adb34b7184d.webp(
) Hord
Stake ETH to earn LSD hETH. Rewards accumulate in the staking pool, increasing the value of hETH over time. Achieve higher APR through various means:
Current APY is 17.9%, staked amount is 223.22 ETH, number of stakers is 57, FDV is 12.8 million USD.
![LSDFi War continues to heat up, detailed explanation of 5 strategies for generating excess returns]###https://img-cdn.gateio.im/webp-social/moments-35e97619109e371218e5b435bb5f6e3c.webp(
) Parallax Finance
Currently, liquidity infrastructure is only available on Arbitrum### in L2(. It is in the testing phase, and Tester qualifications are required. In addition to providing staking rewards, its Supernova product also offers leverage and lending services for staked assets. ) has not issued tokens and testing can be applied for (.
![LSDFi War continues to heat up, detailed explanation of 5 strategies for generating excess returns])https://img-cdn.gateio.im/webp-social/moments-54072636798dc9fbfa56eb8212705f0d.webp(
) bestLSD
The testnet is about to start, seemingly as a Real Yield aggregator, using aggregated returns to subsidize its own LSD - bestETH. The scope includes high-yield assets such as GMX, GLP, veCRV, veVELO, etc. Currently, the documentation and website are quite simple.
![LSDFi War continues to heat up, detailed explanation of 5 strategies to generate excess returns]###https://img-cdn.gateio.im/webp-social/moments-2b92720b45ce09a4d7e0f60713cc94c4.webp(
) 0xAcid DAO
The management protocol for maximizing LSD asset returns is about to be launched on Arbitrum and Ethereum. The main strategy is to place most assets in stable nodes, with a portion invested in high-yield strategies such as Frax and Aura LP Pool. Recently announced a partnership with Pendle for yield leveraging and providing services such as lending and LP.
![LSDFi War continues to heat up, detailed explanation of 5 strategies for generating excess returns])https://img-cdn.gateio.im/webp-social/moments-066463fd83f6d1f5a0515e5e9c581e0e.webp(
) EigenLayer
In addition to the aforementioned features, there are potential DeFi combination possibilities:
![LSDFi War continues to heat up, detailed explanation of 5 strategies to generate excess returns]###https://img-cdn.gateio.im/webp-social/moments-2ed496a94b12f055d4b8b8872cd628a3.webp(
) Index Coop
Decentralized cryptocurrency index community, issuing two LSDFi related products:
dsETH###Diversified Staked ETH Index(: Composed of rETH, wrapped stETH, and sETH2, it reduces the risk of a single token and stabilizes overall returns. The system automatically adjusts the asset ratio to optimize returns.
icETH: Leveraged liquid staking strategy product, providing higher ETH yield through AAVE v2.
dsETH supply is 485, with a fee of 0.25% and an APY of 4.59%. icETH supply is approximately 10,000 ETH, with a fee of 0.75% and an APY of 5.26%, supporting only stETH.
![LSDFi War continues to heat up, detailed explanation of 5 strategies for generating excess returns])https://img-cdn.gateio.im/webp-social/moments-a9b6dce0941027b661222125336484e4.webp(
) Gitcoin
Launched Gitcoin Staked ETH Index in collaboration with Index Coop###gtcETH(. The returns come from the earnings of users' staked ETH/LSD/USDC in various strategy pools. Gitcoin and Index Coop share 2%, with 1.75% of Gitcoin's share used for public goods donations. Currently, the supply is 113.85 ETH.
![LSDFi War continues to heat up, detailed explanation of 5 strategies to generate excess returns])https://img-cdn.gateio.im/webp-social/moments-3495e3188b2370e2171e74c782479492.webp(
Summary
Incentivized LSDFi projects compete for LSD control, affecting future cooperation and the DeFi ecosystem. Ultimately, there may only be a few players left, and Lido's dominant position may be challenged.
Strategy stability is key to the LSDFi project. High yields may bring sustainability issues, but they could become the norm over time. In the future, 100%+ APY may not be considered high.
Yield Maximization Strategy: Stake with non-Top 3 Liquidity Staking Provider ) such as frxETH (, leverage yield subsidies to gain 10% yield, then