Liquidity Redemption Protocol: The Latest Innovation in LSD
In the Ethereum ecosystem, especially after the Shanghai upgrade, the development of the field of Liquid Staking Derivatives has shown full innovation and adaptability. Started with Lido, a player that plays a key role in the Ethereum staking mechanism. By providing a staking solution for Ethereum, Lido solves the significant problem of liquidity lock-in. Their approach allows users to stake Ethereum while maintaining some liquidity, which is a significant leap from the traditional, rigid staking paradigm.
Subsequently, the addition of Pendle Finance brought a new transformation. By tokenizing earnings, users were able to conduct earnings transactions through interest-rate-based protocols, adding new gameplay to the LSD field and opening up new opportunities for earnings optimization and risk management. way.
However, the market’s desire for higher yields and more efficient use of pledged assets has not been fully satisfied. This has led to the development of more complex mechanisms such as the restaking protocol Eigenlayer. Eigenlayer allows stakers to re-stake their Ethereum, enhancing the security and reliability of other protocols. This not only increases stakers’ potential earnings, but also contributes to the resilience and security of the entire Ethereum network.
But a challenge quickly emerged, which was that tokens locked on Eigenlayer lost liquidity and became inactive, thus becoming limited in diversity within the DeFi space. This has led to the innovation of Liquidity Rehyping Tokens (LRT), a solution that unlocks the liquidity of these rehypothecated assets while allowing stakers to further increase their returns by participating in DeFi. Users can deposit LRT into the liquidity re-pledge protocol to obtain income.
As a result, the LSD field has grown from its humble beginnings as a single layer of pledges into a much more complex and multi-faceted ecosystem. Recent developments such as the launch of Blast exemplify this trend. Blast is an EVM-compatible Ethereum second-layer network that provides native ETH and stablecoin staking benefits on its chain, which further democratizes the acquisition of staking rewards and makes the process more user-friendly and diverse. This evolution of the LSD narrative highlights a dynamic and adaptable Ethereum ecosystem that is constantly innovating to meet user demands for greater liquidity and yields, while navigating the complexities and risks inherent in the world of decentralized finance. navigation.
According to Dune data, so far, the value of TVL on EigenLayer has reached 11.3 billion US dollars, the pledged ETH has reached 2.8134 million, and the re-pledged token (LRT) continues to rise. So, besides EigenLayer, what other projects are worthy of attention?
KelpDAO is a multi-chain liquidity staking platform. Its founder previously founded the liquidity staking protocol StaderLabs. Stader is the second largest LSD protocol on both Polygon and BNBChain. KelpDAO is currently building an LRT solution on EigenLayer, with its restaking token being rsETH.
ether.fi is a liquidity staking platform that has launched its liquidity re-staking token eETH on November 15, 2023, allowing users to stake their ETH to obtain staking rewards and automatically re-stake their ETH in EigenLayer without the need for users Re-staking is done manually. eETH can be used in DeFi protocols such as Pendle, Curve, Balancer, Maverick, Gravita, TermFinance, Smmelier, etc.
Stakestone is a one-stop full-chain LST staking protocol, benchmarked against Lido, which can bring native staking income and liquidity to Layer 2. It not only supports the head staking pool, but is also compatible with re-staking and will integrate EigenLayer. StakeStone is also deeply involved in Manta’s incentive activities. Of Manta New Paradigm’s $900 million TVL, StakeStone provided $720 million in liquidity.
Entangle is a cross-chain DeFi protocol, and its products include LiquidVaults, oracles, and Photon communication protocols. Entangle is trying to enter the re-pledge track. Users can deposit their LP tokens or pledge tokens into LiquidVaults to obtain 1:1 supported LSD, which can be used for re-pledge or exchange. In January 2024, Entangle completed US$4 million in seed and private placement rounds, with BigBrain Holdings, LaunchCodeCapital and other institutions participating in the investment.
Karak is a modular Layer 2 with native risk management, re-staking and AI infrastructure. Currently, users can earn XP rewards on Subsea. On December 13, 2023, Karak developer Andalusia Labs completed a US$48 million Series A financing, led by Lightspeed Venture Partners, with a valuation of more than US$1 billion.
OmniNetwork is a re-staking blockchain that allows developers to access their applications across all Rollups, and Omni validators need to re-stake their ETH to participate in network consensus. Omni introduces a unified global state layer to ensure security through EigenLayer’s re-pledge, which can be used for cross-chain communication, lending, etc. between different Rollups. In April 2023, OmniNetwork completed US$18 million in financing, with participation from Pantera Capital, TwoSigma Ventures, JumpCrypto, Hashed, TheSpartan Group, etc.
AltLayer is a Rollup as a Service protocol. In December 2023, EigenLayer cooperated with AltLayer to launch RestakedRollups. AltLayer expects RestakedRollups to be available as a single bundle so that Rollup users can benefit from a single point of integration. RestakedRollups can integrate decentralized sorting, fast determinism, composability and other functions into a single Rollup. AltLayer is also one of the first 8 partners to use EigenDA for data availability.
SSVNetwork is a decentralized open source ETH staking network based on Distributed Validator Technology (DVT). A tweet on January 4th showed that SSV will cooperate with EigenLayer to complement and re-stake, claiming that a “mainnet” EigenLayer validator is running on SSV. At the same time, both EigenLayer and the stakers can choose to transfer the responsibilities of the validator to SSV and maintain the re-staking status of ETH on EigenLayer to obtain additional income from the SSV incentive main network.
The post first appeared on HTX Square.
