LSDFi Heats Up, Analyzing Five Excess Return Strategies

LSDFi is a DeFi product based on the liquid staking derivative (LSD). Through LSD, stakers can convert their staked ETH into tradable assets, unlocking liquidity while lowering the staking threshold. The backbone of LSDFi is the composability of DeFi, with new projects attracting users to stake ETH/LSD through various incentives to gain market share and control over LSD.

The following are the five main forms of LSDFi:

1. LP( Yield 10% + )

On the basis of ETH staking rewards, additional income can be obtained by providing LSD-ETH liquidity. After the Shanghai upgrade, the LP scale may continue to increase.

2. Circular Lending ( Yield 10% + )

By cycling staking LSD and borrowing ETH on lending platforms to obtain leveraged returns. The liquidation risk is high, and the actual returns depend on the number of cycles.

3. Yield(10%+)

A yield aggregation platform similar to Yearn Finance, which increases LSD yield by combining yields and token subsidies from multiple platforms.

4. EigenLayer( unknown收益)

Provide various staking methods such as secondary staking of LSD and LSD LP, as well as super liquidity staking.

5. Incentive LSDFi Projects

Improve capital efficiency through leverage, options, bonds, etc., or attract users by utilizing high APY. Representative projects include:

• Pendle: Offers LSD discount trading and high-yield liquidity pools
• Ion Protocol: Tokenize LSD into allETH and vaETH
• unshETH: Dynamic allocation of incentives to enhance the decentralization of validators.
• LSDx Finance: Aiming to become a DEX for LSD assets
• Liquid Staking Derivatives: LSD Aggregator
• Stader Ethereum: ETHx is coming soon
• Hord: Achieve higher APR through various methods
• Parallax Finance: Provides LSD yield and leveraged lending on L2
• bestLSD: Real Yield Aggregator
• 0xAcid DAO: A management protocol for maximizing LSD asset returns
• Index Coop: Issues dsETH and icETH index products
• Gitcoin: Launching the gtcETH index for public goods donations

Overall, the LSDFi project is competing for market share and discourse power in the LSD market. High yields may continue for a period of time, but stability and sustainability are also important. In the future, products with different risk-return levels may emerge, and the LSD War could last until the Ethereum staking rate stabilizes above 25%.