Introduction
We already published two articles part of our study on LSD & LSDFi, in which we take a look at the many protocols already launched and in development in the expanding LSDFi space.
The LSDFi infrastructure in its current form can be categorised into 4 levels:
1 – LSD staking Infrastructure
2 – LSD Protocols
3 – LSDFi protocols, backed LST
4 – Level that based on top of LSDFi protocols
Layer 2 can also be split into separate categories:
• CDP: Gravita, Raft, Lybra, Lucid, PrismaFi, Ethena
• Index LSDs: UnshETH, LSDx, Indexcoop
• Protocols that improve return strategies: Flashstake, Pendle, InstaDapp
• Infrastructure protocols: Tenet, Eigen Layer
unsheth_xyz supports direct ETH stacking and LSDs like: ETH, wETH, sfrxETH, rETH, wstETH, cbETH, ankrETH, swETH. It’s an Omnichain protocol integrated with LayerZero, present in BSC, Arbitrum, Ethereum, with plans for zkSync & Optimism.
The unshETH product itself is an index issued for LSD assets, has a peg to ETH but is Reward-bearing LSD. It is also an omnichain token that allows for farming across different chains. Holders of unshETH can receive commissions for ETH staking and income for LSD asset swaps.
$USH is the main token of the protocol, which is also an omnichain token. According to Dune Circulation Supply is 49.34m, Total Supply is 143.5m USH according to the token contract and Discord data
Dune shows currently TVL is $18,1m with apparent downward trend across all pools and chains. Outflow has been looking bigger than Inflow lately. $USH token price fell by 37% on hack day (1 June) and continues to fall.
pendle_fi is different because it’s a multi-asset product with various instruments. Functionality including trading yield-bearing ETH interest. SY token is wrapping of the yield-bearing LSD and split into two separate tokens: the base token (PT) and the yield token (YT)
vePENDLE governance token received for staking $PENDLE from 1 week to 2 years. And amount of vePENDLE decreases until the staking period concludes. vePENDLE holders to increase the yield per LP up to 250%. Yield is generated from swap comms on Pendle AMM and YT comms.
At present, the outflow exceeds the inflow, yet the TVL is not experiencing a decline. Its token launched back in May 2021. Since January 2023, when the LSDFi narrative began to actively accelerate, $PENDLE has shown very good growth of more than 20x.
Flashstake provides options for staking ETH and wETH through Lido and RocketPool. Flash apart from other LSDFi protocols is allows to profit and withdraw deposit at any given moment. Its important to note that Flashstake supports also other tokens like GLP, sUSD, and USDC
Since August 2022, Flashstake’s TVL has been on an upward trend. DeFiLlama reports a TVL of $4.21 million. There is no strong bias towards inflow or outflow. $FLASH price peaked on 15 April 2023. 24h vol was max at $1,06m, and currently the 24h vol is $3.6k (as of 17 August)
eigen layer supports direct ETH staking and various LSTs such as rETH, cbETH, and stETH. There are plans to integrate additional LSTs. Eigen uses rETH and stETH for a process known as restaking. Validators also have the option to restake LP of pairs that include LST and ETH
Notably, EigenLayer has secured an impressive $64.4 million in backers contribution, which is somewhat unusual for LSDFi projects. TVL: Coindesk it is reported that EigenLayer reached TVL $16m on 16 June. As of 17 August, Eigen Layer holds the equivalent of 44,963 ETH.
LSDx finance The protocol operates on both Ethereum and zkSync Era chains. It supports direct ETH staking and LSTs such as stETH, frxETH, and rETH, with a current APR of 3.03%. The LSDx protocol has its own LST token.
The token is used for managing the protocol via LST staking and receiving veLSD, and for receiving rewards for mining and veLSD staking. Interest in veLSD was likely dampened due to the long blocking periods and high penalties for early withdrawal of blocked LSTs.
Social activity is falling along with other indicators: at the beginning of April, Twitter had 10k followers, Discord had 3.2k participants, and by the time of 13 August it had become 5.2k and 2.9k respectively. TVL in LSDx is $169.38k as of 18 July and 246,6k as of 13 August
ethena_labs offers a native $USDe stablecoin that will be backed by delta hedged Ethereum collateral. Stability is provided by short leveraged perpetual positions executed against the collateral immediately upon issuance.
Ethena products and mechanics:
The launch is planned for Q3-23 after the 2nd audit and testing. It is generating interest from the community, which can be seen in the growth of the numbers: Twitter grew from 8.8k followers on 28 July to 10,2k on 13 August, and Discord grew from 6.6k to 8.1k members.
Among other things, this may be due to the fact that Ethena has committed $6.5m in funding and has an impressive list of backers with lead DragonFly and Wintermute, GSR, Delphi Digital, Gemini, Bitmex, ByBit, Maelstorm, Lightspeed, Huobi Ventures, OKX Ventures and others.
Tapio Finance offers an LP token issue $tapETH, serving as a liquidity aggregator and arbitrage centre. tapETH represents stable pools between LST and ETH such as:
•stETH-ETH
•rETH-ETH
•cbETH-ETH
It is also mentioned that tapETH could be used to issue a stablecoin.
In October 2022, Tapio committed a $4m seed round from Polychain, Hypersphere, Arrington, Spartan, LongHash, 0xVentures, CMS, D1 Ventures, 11-11 DG Partners, Genblock, Valhalla, PAKA, and Double Peak.
Mori Finance offers to generate stable assets with low volatility without any losses by securing ETH and have two tokens:
•ETHS is like a stablecoin backed by ETH and allows for LP ETH/USDC yields.
•ETHC is similar to a leveraged perpetual option with no forced liquidation
Mori uses xTokenomics, popularized by Camelot DEX. Protocol has a $MORI token that will be able to be locked into xMORI to manage and generate yield with increasing yield. The protocol has committed a total of 150ETH at 0.005 ETH per MORI for the private and public rounds.
Token Reactor was launched back in 2021 as a liquidity engine for decentralised exchanges, built on top of Convex. V2 introduces a protocol for automated deployment of ETH from a LMP between trusted pools and DEX, automatically aggregating revenue and saving gas costs.
Tokemak supports pools such as, for example, Balancer stETH/ETH and rETH/ETH, Curve cbETH/ETH, Maverick sfrxETH/ETH. It commitmented $4m in 2021 from Framework, Electric, CB, North Island Ventures, Delphi, ConsenSys. $TOKE mcap of $11.2m as of 28 July to $9,5m as of 17 August
tenet_org offers to use ETH, LST: stETH, cbETH for validation/delegation in L1 Tenet. When a user stakes an LST, they get a tLST, which is Tenet’s representation of the steaked LST. Ownership of tLSD token that allows to earn revenue through the rewards of the underlying LSD
In addition, Tenet has its own CDP stablecoin LSDC, which is based on the Liquidity codebase with a collateral ratio of 125%, which can be backed by tLSTs such as twstETH and tcbETH. And for the same assets, users can get tLSD for LSDC borrowing.
Tenet has its own native token $TENET that accrues rewards for LSDC validators, delegators and stakers. The staked/delegated version of the token (i.e. tTENET) entitles holders to rewards paid in TENET. And in order to get veTENET governance token, users need to lock tTENET
divas taking differs from the other projects in that it is a DVT protocol that offers LST divETH, which is a Rebase LSD similar to stETH and wdivETH, which is a reward-bearing token. DVTs usually do not have economic mechanisms and LST like SSV and Obol, while Diva has both
In January 2023 Diva announced the closing of a $3.5m seed round from A&T Capital, Gnosis, Bankless, OKX Ventures, Metaweb, DCV Capital, Alphemy Capital, http://staked.vc and angels from projects such as Metacartel, Aave, zkEVM, EigenLayer, and many more
puffer finance is liquid-staking protocol on Eigen and is more of an tech project. Puffer is a liquid-staking protocol that allocates ETH to node operators without requiring permission to run the Ethereum PoS validator. Users who stake ETH receive a reward-bearing LSD pufETH
With the introduction of Secure-Signer, validators of all sizes are offered the opportunity to contribute to the security of the Ethereum network through the Puffer Pool. Integration of SGX provides a significant enhancement in security, protecting honest NoOps from attacks
Puffer received contributions $5.5m from backers such as Lemniscap, Animoca, Bankless, Brevan Howard, Concave, DACM, LBANK, Wagmi33, IoTeX, and others. Also Puffer obtained an Ethereum Foundation’s grant and added Dankrad Feist and Justin Drake to list of notable DAO members
Vibranium LSD is interesting because it is a hardfork of v2 Lybra Finance. But unlike the Lybra, Vibranium initially supports rETH in addition to stETH and ETH. Initially, vUSD will be backed by ETH and stETH, while rvUSD will be backed by rETH.
Stake Stone will combine the underlying assets of blue chips and DeFi protocols across multiple chains (Mantle and Linea in addition to Arbitrum). Yields are generated by both ETH staking and various blue chip assets, examples of which include , Lido, Balancer, Aura, etc
To increase yield, $STONE tokens are proposed to be used in Stone’s LSTFi Eco:
• DEX with dynamic liquidity pools
• Stablecoin collateralisation
• Lending protocol
• Derivatives market
ion protocol is a hybrid between a CDP issuer and a lending marketplace and offers users to issue allETH tokenised stablecoin pegged to the ETH for assets such as: LST LP, restaking positions, LST indexes, Stakewise VLT, dsETH IndexCoop, UnshETH, Yearn yETH and Aura ERC-4626
Another feature – that ION initiation of liquidations by changes in the state of the consensus layer rather than by price oracles. Liquidations are not triggered based on price volatility, but on changes in underlying validator balances of the respective collateral providers
Seneca USD is isolated omnichain lending market (CDP) with $SEN stablecoin for LSTs and exotic collateral. Seneca is similar to ION in that it offers support for assets such as: LPs (e.g., Balancer’s BPTs), LSTs, Deposit receipts (e.g., Aave’s aUSDC), PT (Pendle’s wstETH PT)
ZeroLiquid_xyz offers Zero Vaults, the concept of which is similar to Eigen: users deposit LST or ETH into Zero’s vault and receive synthetic zETH. Protocol periodically harvests staking rewards, which are credited on a proportional basis, reducing users outstanding debt
$zETH has a soft peg relative to ETH can be levelled by arbitrageurs as well as by Zero Fund to maintain the peg during times of high volatility in the market. Zero owns the liquidity of ZERO/ETH on Uniswap v3. ETH generated from LP fees will be used to add zETH/ETH liquidity
lucid_fi has an LST-backed stablecoin DUSD which is an omnichain token. Lucid will reportedly support leading LST tokens such as stETH, rETH, frxETH, frxETH, cbETH and bETH as well as LP tokens (LPT) from protocols such as Curve, Balancer and Yearn from launch.
gusher_xyz aims to be the Convex layer for unshETH, boosting and optimising rewards for USH takers and liquidity providers in unshETH protocol. In particular, users can block a USH or provide an already blocked vdUSH and receive a tokenized version in the form of gushyUSH
Raman_Fi enables the unlocking of liquidity by using LST-backed stablecoins as collateral for minting synthetic assets, sidestepping the fragmentation associated with the emergence of numerous LST-backed stablecoins, the first of which will be R from raft_fi
