The battle for the LSD market begins, summarizing 9 potential agreements

Written by: Louis Cooper

Compiled by: 0x11, Foresight News

The Shanghai upgrade will release over $27 billion worth of ETH, which means the battle for the LSD market has begun, centered around offering the highest APR.

The question is, who will be the winner? It could come from the 9 LSD protocols below: ? ?

Before we officially begin, we need to understand the Ethereum Shanghai upgrade.

This is the first major upgrade for Ethereum after its transition to PoS. It will introduce the staking ETH unlock feature to help validate and secure the Ethereum network.

Since 2020, Ethereum validators have been staking their ETH without any returns… until the Shanghai upgrade.

So where do LSD platforms come from? To become an Ethereum validator, you need up to 32 ETH. LSD platforms allow staking any amount of ETH (of course, for a fee).

Thus, as rewards are finally activated, the motivation for everyday ETH holders to participate in staking will surge. The gold rush for LSD platforms is on, and the platform that can consistently offer the highest APR will win. Let's find out who that might be!

Pendle

Pendle is perhaps my most favored LSD contender.

Why? Pendle's TVL is nearly double its market cap, with a significant influx of assets following its V2 release.

Pendle has created a unique tokenized yield strategy: Principal Token (PT) and Yield Token (YT). (Click here for more)

Optimistically, due to @CamelotDEX, Pendle is now also available on Arbitrum.

They have established strategic partnerships with other niche markets, such as @AuraFinance. This gives me confidence in the following aspects:

• Team legitimacy

• Intent to provide a genuine, competitive product

Stader

Stader is set to support Ethereum network staking and launch ETHx, which will reduce the requirements for ETH nodes by 8 times (only needing 4 ETH). Importantly, they also require 0.4 ETH in Stader. This means supply tightening and a great opportunity.

As @NagatoDharma pointed out, the SD token is still 60% lower than its public sale price.

With a reliable market cap to TVL ratio, seeing SD above $5 seems promising.

Read Nagato's post for a comprehensive understanding of the tokenomics/income.

Hord

As part of Dcentralab, Hord is completing an audit of hETH with the help of Zokyo.

They claim to achieve higher APR through multiple avenues:

• ETH staking

• MEV rewards

• Additional HORD rewards

Due to the extra rewards, the price of hETH is not pegged to ETH.

The Hord team has ambitious plans, but their position in Dcentralab means they have strong development capabilities.

HORD has already seen significant growth, but its FDV is still below $20 million, with a circulating market cap of $6 million.

Can they attract ETH holders?

Frax Finance

Frax Finance needs no introduction, its LSD variant frxETH has a TVL of $170 million.

The TVL of frxETH has grown 100 times since last November, primarily driven by its impressive high yields.

Bifrost

My interest in Bifrost was sparked by @Crypt0_Andrew and the TVL/MC (value of staked ETH / project market cap) ratio.

Currently, Bifrost's FDV is $7 million, with 18,000 ETH staked, and the TVL/MC ratio is 4!

Bifrost is operated by an OG team from the Polkadot ecosystem, and the potential of BNC is worth looking forward to.

SharedStake

SharedStake is my most adventurous choice, which I learned about from @CryptoShlug.

There are 16,000 ETH staked in SharedStake, but its market cap is only $1 million. They optimize income by combining Ethereum staking with their own MEV bot (generating over 100 ETH in returns).

StakeWise

StakeWise is another "safer" protocol that plans to enable v3 before the Shanghai upgrade. On the surface, the protocol seems undervalued, with a TVL of $140 million and a market cap of $40 million.

However, considering that SWISE has a monthly inflation rate of 2% and an FDV of $180 million, its outlook is not so optimistic.

Liquid Staking Derivatives

Liquid Staking Derivatives is an LSD aggregator and a competitor to @iearnfinance. They have designed a clever flywheel for veLSD/LSD, and I’m eager to see it in action; will it attract enough ETH?

Liquid Staking Derivatives has a market cap of $2 million, and its yield potential is evident to me, but caution is advised.

0xAcid Protocol

The last project is 0xAcid Protocol, an ambitious LSD protocol aiming to raise 4,000 ETH, which I am skeptical about.

0xAcid Protocol claims to maximize returns on LSD assets, similar to the previously mentioned frxETH and stETH.

Finally, there are many protocols I couldn't include but still have potential to compete for LSD market share:

• $AURA
• $YFI
• $FIS
• $RPL
• $DVT
• ……

Remember: anyone can slap the label "building LSD protocol" on something, so be cautious.

Who did I miss? ?

For obvious reasons, I did not mention Lido. It currently completely dominates the LSD market, but I expect this situation to change as competition intensifies.