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MainInsightsAnalysisLiquid Staking Derivatives — T...

Liquid Staking Derivatives — The Undercovered Narrative


Liquid Staking Derivatives — The Undercovered Narrative
Liquid Staking Derivatives (LSD) is a solution where a user blocks tokens on the DeFi platform and in return receives an equivalent token (derivative). This token can be used for other purposes, such as trading on venues or providing liquidity. This allows users to utilize tokenized assets while earning commissions efficiently.
EthereumLiquid Staking
Jun, 13, 2023
1 min read
by CryptoRank
Liquid Staking Derivatives — The Undercovered Narrative

LSD Key Players and Protocols

LSDs are gaining momentum because of Ethereum's move to Proof-of-Stake. In order to hold nodes, users need to stake at least 32 ETH. Therefore, the logical solution was to create pools to participate in steaking. The Shanghai update was also key after its validators were able to withdraw ETH from staking.

The amount of Ethereum being staked is only growing. To date, more than 23 million ETH has been staked. The share of Liquid Staking protocols is leading with 37%.

The largest players are Lido and Coinbase. They account for 40% of the sector. Lido’s TVL is valued at $14.627 billion and Coinbase at $2.25 billion. Rocket Pool is also popular, with a TVL of $1.9 billion.

You can look at LSD protocols that are still in the early stages, such as Swell Network and EigenLayer. Stealthy in these, you can count on a possible retrodrop. Other LSD protocols can be found on CryptoRank.

Pros and Cons of Liquid Staking Derivatives

The main pros include:

  • flexible risk management

  • additional revenue opportunities

  • lower entry threshold into the ecosystem

As for the downsides, the main ones would be the following:

  • possible protocol hacks

  • provider fees

  • possible depeg

The development of new tools and Layer 2 solutions predicts a bright future for the Ethereum ecosystem.

 

Discover Liquid Staking Protocols

Disclaimer: This post was independently created by the author(s) for general informational purposes and does not necessarily reflect the views of ChainRank Analytics OÜ. The author(s) may hold cryptocurrencies mentioned in this report. This post is not investment advice. Conduct your own research and consult an independent financial, tax, or legal advisor before making any investment decisions. The information here does not constitute an offer or solicitation to buy or sell any financial instrument or participate in any trading strategy. Past performance is no guarantee of future results. Without the prior written consent of CryptoRank, no part of this report may be copied, photocopied, reproduced or redistributed in any form or by any means.

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Liquid Restaked Tokens — The Future of DeFi?

EigenLayer has introduced a new concept — restaking. Restaking uses the staked Ethereum to secure other blockchains and applications. This allows developers to simply use Ethereum, which has been proven as a reliable solution over the years, instead of building a complex network of validators. In return, users get increased rewards.
Oct, 16, 2023
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by CryptoRank

In This Insight

Coins

$ 0.853
+7.37%
$ 1,817
+1.22%
$ 0.844
+2.18%
$ 4.02
+6.54%