Research Summary

The article discusses the next step in DeFi composability – LSDfi, as $ETH staking infrastructure matures and users get increasingly comfortable holding and earning with $ETH in its staked form. LSDfi protocols simplify technical complexities and reduce gas costs, allowing LSD holders to efficiently manage the yield from their staked assets. The article also mentions that Lido’s dominant market share of over 70% in the LSD market, $stETH is the most widely accepted LSD across LSDfi protocols.

Actionable Insights

  • Interest in staked $ETH remains strong: Following Lido V2, LSDs sum up to nearly 48% of the 18.8M $ETH staked to date.
  • Competition for LSD market share is growing: $rETH and $frxETH have steadily gained traction throughout the year.
  • LSDfi products fall into two general categories: Loans that work to offset themselves or disproportionately reward loan token holders via staking yields, and Yield Optimizers that offer boosted yield to pool contributors.
  • Lybra Finance stands out: With its LSD backed stablecoin, $eUSD, which rebases based on the yield earned by the LSD collateral within the protocol.
  • Origin Protocol launched its new product, $OETH: It aggregates various LSDs to generate boosted yields through liquidity provision on top of standard staking yield.

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