The Ethereum liquid staking derivatives finance (LSDFi) ecosystem is booming post-Shapella. 
A handful of LSDFi protocols have been making rounds with staggering amounts realized in TVL. 

The Ethereum liquid staking derivatives finance (LSDFi) ecosystem is booming despite the ongoing market chaos. This year alone, the LSDFi sector has reportedly seen its value increase significantly.

According to data from CoinGecko, a leading crypto data aggregator platform, the LSDFi sector’s total value has increased by a staggering 5,870% since the start of the year. This has pushed TVL to $919.0 million towards the end of August. These figures are likely to increase in the coming months.

Liquid Staking Derivatives (LSDs) are tokenized receipts issued to users after they make deposits into their liquid staking protocols. LSDs typically represent the ownership of staked assets and can be traded for other assets on crypto exchanges. They can also be used as collateral for loans.

Interestingly, the integration of LSD protocols, post-Shapella, has continued to record consistent inflows of ETH and Lido. Notably, Lido has emerged as the leading LSD player, with daily net inflows surging by more than 18,000 worth of ETH.

“Lido, the leading LSD player, saw daily net inflows of +18K ETH. It saw its largest outflow on May 18, with over 400K ETH withdrawn. This was then followed by 127K ETH stake on May 24, the highest daily net deposits experienced by the protocol since Shapella.” Coingecko asserts.

So far, Liquid Staking Derivatives (LSDs) seem to be matching up to market expectations, as it was mainly introduced to push smaller ETH holders to partake in staking and unlocking liquidity, not long after the launch of the Ethereum beacon chain back in December of 2020.

Lybra and Pendle emerge as best-performing LSD protocols

According to the report from Coingecko, the top 8 LSD protocols have brought in an average of 4.4% Annual Percentage Yield (APY) since January of 2022. As the amount of staked ETH continues to increase, this percentage is expected to decline.

The leading LSDFi protocols spearheading this new development are Lybra and Pendle. Lybra, launched post-Shapella, is now a leading LSDFi protocol, with 39.1% of TVL or $359.0M by the end of August.

EigenLayer, another top-performing protocol has benefited greatly from the LSDFi hype. It now boasts of a whopping $245.0M in TVL since its launch in June 2023. This success, according to Coingecko, can be partly attributed to users looking forward to a potential airdrop.

The Pendle LSDFi protocol is also another significant player in the market at this time. As Coingecko explains;

Pendle, which was launched in 2021, experienced renewed interest amidst the surging popularity of LSDs in 2023. Its TVL rose by 903%, from $15.4M to $139.4M between January and August 2023, and is now the third largest LSDFi protocol.

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Filed under: Bitcoin - @ October 19, 2023 10:25 am