LSDfi: Unleashing the Potential of Liquid Staking in DeFi

Liquid staking derivatives (LSDs) have emerged as a game-changer in DeFi. By combining the benefits of staking and liquidity, LSDs have opened up new avenues for maximizing yield and generating additional opportunities.

The successful transition of Ethereum to Proof-of-Stake (PoS) has led to a significant growth in staking.

With the introduction of LSDs, users can now participate in staking without the technical complexities and capital requirements associated with running a solo node. LSDs, such as stETH, rETH, and WBETH, retain the liquidity of staked assets and allow users to engage in the broader crypto ecosystem.

The Ethereum ecosystem boasts a diverse range of liquid staking providers — Lido holds the largest market share, followed by centralized exchanges like Coinbase, Binance, and Kraken. While there are smaller providers as well, their contribution to staked ETH remains relatively small.

LSD protocols have revolutionized the financialization of LSDs. These protocols, built on top of LSDs, enable LSD holders to maximize their yield and put their assets to work. The LSDfi ecosystem comprises both mature DeFi protocols that have integrated LSDs and newer projects predominantly based on LSDs.