LSDFi Explosion: Comprehensive Analysis of High-Yield Strategies as the New Era of ETH Stake Arrives

LSDFi is a DeFi product based on LSD. Through LSD, staked ETH can be converted into tradable assets, unlocking liquidity while lowering the staking threshold. Users can stake any amount of ETH, and after obtaining LSD, they can also generate multiple returns.

LSDFi is built on the Lego of DeFi, and new projects often attract users to stake ETH/LSD through token incentives and other means to gain market share and control over LSD. Some projects also leverage dynamic yield to guide users to choose smaller decentralized staking platforms, promoting the decentralization of validators.

LSDFi mainly has the following forms:

1. LP(收益10%+)

Before the upgrade in Shanghai, LSD could not be directly exchanged for ETH, leading to the emergence of many LSD-ETH liquidity pools. The basic yield is less than 5%, mainly relying on token subsidies to increase the APY. Stakers can earn network rewards and LP fee rewards. As the base of LSD increases, the scale of LP may continue to expand.

2. Circular borrowing ( yield 10% + )

By staking ETH on Lido to obtain stETH, and then depositing stETH in Aave to lend ETH, this cyclical operation can yield higher returns. However, the liquidation risk is relatively high, and the actual returns depend on the number of cycles. It is expected that automated cyclical lending products will emerge in the future.

3. Yield(10%+)

Established DeFi projects like Yearn Finance enhance yield by aggregating returns and subsidies from multiple platforms. For example, Yearn has established a liquidity pool on Curve, increasing the stETH APY to 5.89%.

4. EigenLayer(收益未知)

EigenLayer offers various staking methods, including Liquidity staking and Super Liquidity staking. You can restake LSD or LSD LP tokens that have already been staked on platforms like Lido onto EigenLayer.

5. Incentive LSDFi Projects

Enhance capital efficiency through leverage, options, bonds, etc., or attract savings with high APY. For example, Pendle offers discounts for purchasing ETH and high-yield liquidity pools; Ion Protocol tokenizes LSD into allETH and vaETH; unshETH incentivizes small staking platforms through dynamic allocation; LSDx Finance aims to become an LSD asset DEX; Liquid Staking Derivatives is an LSD aggregator; Stader Ethereum is set to launch ETHx; Hord achieves higher APR through multiple avenues; Parallax Finance provides yield services on L2; bestLSD is a Real Yield aggregator; 0xAcid DAO maximizes LSD asset returns through various strategies.

In addition, projects like EigenLayer, Index Coop, and Gitcoin have also made moves in the LSDFi space. Overall, LSDFi projects are competing for market share in the LSD sector, and high yields may persist for a while. The risks and returns of different strategies vary, and the impact of LSDFi on the decentralization of validators remains limited. This LSD competition may continue until the Ethereum stake rate stabilizes above 25%.