Research Summary
The report provides an in-depth analysis of the liquid staking tokens sector, highlighting its dominance in the DeFi market with a total value locked (TVL) of $31B. It covers key players in the sector, including Jito, Marinade, Redacted, and Frax, and discusses their recent developments and performance.
Key Takeaways
Liquid Staking Dominance
- Robust DeFi Sector: Liquid staking has proven to be the most robust DeFi sector, with a TVL of over $31.25B and a 3.9x YoY growth. The sector’s growth is driven by users’ interest in accruing staking rewards while accessing earning opportunities across various projects.
- Centralization Risk: Ethereum, the largest LST market, faces a centralization risk as Lido nears a critical 1/3 sector share. However, competition is robust on other chains like Solana, with native LST projects like Marinade and Jito gaining momentum.
Jito StakeNet
- Validator History Program: Jito StakeNet’s validator history program stores about three years of data for over 2,000 Solana validators on-chain. This data-driven approach ensures transparent management of stake-pool operations.
- Significant Growth: JitoSOL, a leader in MEV-based liquid staking on Solana, has seen significant growth since its launch in October 2022, with a TVL of 6.5M SOL ($680M).
Marinade Finance
- Protected Staking Rewards: Marinade, the leading stake optimization platform on Solana, has introduced Protected Staking Rewards for its delegation strategy. This program asks validators to put up a SOL bond that guarantees performance in case of downtime.
- Impressive Growth: Marinade reached 11M SOL staked by the end of 2023, achieved through the introduction of Marinade Native, which provides access to 100+ validators without the smart contract risk of liquid staking.
Redacted
- Pirex ETH: Redacted released Pirex ETH, a two-token solution built around ETH staking, attracting over 1,200 ETH deposits in three weeks. The two-token design creates an interesting dynamic, with pxETH being liquid and pegged to ETH, and apxETH earning pure ETH yield.
- Leverage Effect: Since most pxETH is not staked, it creates a leverage effect on apxETH, meaning each apxETH earns yield from more than one underlying staked ETH.
Frax Finance
- frxETH Minting Activity: frxETH has seen a noticeable increase in minting activity, with more than $11M minted in the past month. The difference between deposits to withdrawals has held up well since the LST launched, with the current difference sitting around 214k.
- Market Share: Curve is the dominant venue for trading frxETH, maintaining its top position despite the recent volume increase over the past couple of months.
Actionable Insights
- Monitor Liquid Staking Sector: Given the robust growth and dominance of the liquid staking sector in DeFi, it’s crucial to keep a close eye on its developments and key players.
- Explore Solana’s LST Projects: With Solana’s native LST projects like Marinade and Jito gaining momentum, it’s worth exploring these projects for potential opportunities.
- Understand Two-Token Solutions: The two-token solution introduced by Redacted offers an interesting dynamic in ETH staking. Understanding this model could provide insights into new yield generation strategies.
- Track frxETH Trading: With Curve being the dominant venue for trading frxETH, tracking its trading activity could provide valuable insights into the market dynamics of frxETH.
