Will LSD Bring a New DeFi Summer? An Inventory of 4 Unreleased LSD Sector Alphas
currently unissued | veDAO Research Institute
On April 12, Ethereum will usher in the 'Shapella upgrade', which means that the Validator pledge tokens locked nearly two years ago will be unlocked. By then, a large amount of ETH will appear on the market, although in the short term, there will be It will have a certain impact on the price of ETH, but at the same time, it will also greatly increase the liquidity of the Ethereum ecosystem.
Speaking of fluidity, we have to mention one of the most popular words at the moment: LSD. The full name is Liquid Staking Derivatives, liquid pledged derivatives. Recently, in the social environment of Web3 context, we can see discussions about LSD and the introduction of related ecological tokens almost everywhere. Not long ago, VeDAO Research Institute interpreted the currently popular LSD concept project LSDx in an article titled 'Super Liquidity Protocol LSDx Finance Receives $2 Million Strategic Investment from Foresight Ventures | veDAO Research Institute'. But as of now, there is more than one excellent LSD concept project with valuable space, and there are also many Alphas that have not yet issued coins. Therefore, in this article, VeDAO Research Institute summarizes four LSD-related projects that have not yet issued coins in the current market. For your investment reference.
a concept
As mentioned above, the full name of LSD is Liquidity Pledge Derivatives, which is a product that supports users to pledge relevant underlying assets in the contract to provide liquidity for the relevant ecology and obtain rewards. It sounds similar to what we currently understand as Stake to Earn. But the key point of LSD is that the pledged assets will continue to be flexibly used by the pledgers in some way, and a series of financial derivatives have been developed from this.
Since the independent node Validator requires at least 32 ETH, and the validator who cannot obtain Validator TH before the Shanghai upgrade is responsible for adding new blocks to the blockchain, processing transactions and storing data, there is a certain risk, and technical problems can easily lead to The high threshold of loss of pledged assets or loss of rewards has blocked a large number of ordinary users from the door.
The LSD protocol allows ordinary users to participate in staking and receive rewards without the need to maintain staking infrastructure. In addition, the design of the note asset also releases the liquidity of ETH during the staking period, so a large number of users and assets are captured in a short period of time, and Developed into an independent track.
Coincidentally, in the English context, LSD also stands for 'lysergic acid diethylamide', a semi-artificial hallucinogen and psychostimulant. This potion once became synonymous with American young people and hippies in the 1940s. , meaning pioneering and charming. In the same way, LSD represents the latest interpretation of the DeFi concept at the core of Web3 development, and it is also pioneering and charming.
The original intention of LSD was to liberate liquidity. For those who want to stake tokens but don’t want to be tied down, liquidity pledged derivatives can change the rules of the game. These derivatives represent token holders’ pledged assets and confirm the pledger’s participation in the staking pool.
Excitingly, these tokens can be used for borrowing, trading, and collateral in the world of decentralized finance. This means users can get the benefits of staking their tokens without having to give up usage rights. It's a win-win situation, providing unprecedented flexibility and efficiency.
The LSD project aims to create higher returns above the basic rate of return and is a hot topic this year. The market has responded positively to this upgrade expectation, which can be seen from the recent sector prices. Currently, staking solutions based on DVT technology can redistribute nodes and improve the stability of verification nodes, and have been widely discussed.
Two options
DVT technology:
DVT (Distributed Validator Technology), decentralized verification technology. DVT refers to a technology that allows the Ethereum Stake Proof Validator (Validator) to run on multiple nodes (Operator Nodes) at the same time. It can implement a trusted network for Staking infrastructure to ensure the security and decentralization of the blockchain network. Centralization.
In layman's terms, DVT forms a network of node operators, just like the distributed network of the blockchain, and each node in the DVT provider's node operator cluster can have a different client, thereby reducing the cost of single Risk of point failure. The main advantage of DVT technology is that it can form a Validator distributed network, which relies on the consensus mechanism (IBFT) to jointly perform Validator responsibilities like a blockchain node network, and can realize the diversity of Validator Clients, improve the fault tolerance rate, and at the same time reduce Validator eliminates the risk of single point failure and earns stable income. Obol Network, which we will introduce below, is one of the representatives that uses DVT technology. In addition, SSV also uses DVT technology.
Re-Stake Strategy
In addition to DVT technology, the LSD ecosystem also has a solution for staking: Re-Stake, a secondary pledge. Under the concept of re-staking, the pledged ETH can be pledged a second time and solve the trust and security of non-settlement layer Dapps. Through secondary staking and utilizing the existing trust network to protect other infrastructure and middleware layers, this narrative is expected to become the consensus security center of the LSD track, as represented by EigenLayer below. At the same time, EigenLayer is also one of the extensions of last year’s hot concept “modular blockchain”. In addition to EigenLayer, FXS and Rocketpool, which have already issued coins, are also typical representatives of re-staking.
To put it simply, DVT technology focuses more on the decentralization of the staking process and governance process, while Re-Stake focuses more on security and the decentralization of the staking process. Although it transfers the authority of decentralized governance, it also makes the entire model simpler and more controllable.
At present, the two models are not right or wrong. They are both an exploration and attempt at the concept of LSD. Different strategies attract projects with different needs. For example, DVT is often favored by most centralized service providers. In the LSD track, most of the market value is now occupied by centralized service providers, such as Lido (which has deposited more than 4 million ether coins, accounting for 32% of the total pledged crypto assets). This is why they want to introduce DVT technology. The purpose of enhancing decentralized legitimacy. Those who want a simpler way to participate and are not risk-averse tend to favor Re-Stake.
Four Alphas
Obol Network
Official website:
Twitter:
https://twitter.com/ObolNetwork
More information:
https://app.vedao.com/projects/4531cc0518029232f13326bcf8f27e7042ff6a9b44a80ef63dd2b62046fcca03
Project Introduction:
Obol Network, a protocol that facilitates trust-minimized staking through multi-operator verification. Obol focuses on extending consensus by providing permissionless access to distributed validators (DVs). Distributed validators will and should form a large part of the mainnet validator configuration. In preparation for the first wave of adoption, Obol Network currently uses a middleware implementation of Distributed Validator Technology (DVT) to enable the operation of a distributed validator cluster that can retain validator current clients and remote signing infrastructure. Obol believes that distributed validators will account for a large part of the mainnet validator configuration in the future, and is therefore committed to extending consensus by providing permissionless access to distributed validators (DVT), which can be used as the core building block of various Web3 products. piece.
Obol uses DVT technology. In V1 planning, Obol Network’s development and maintenance infrastructure has four core parts and products:
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Distributed Validator Launchpad, a CLI tool and DAPP for bootstrapping distributed validators.
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Charon, a middleware client that enables validators to run in a fault-tolerant distributed manner.
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Charon acts as a middleware between ordinary authentication clients and the beacon nodes they connect to, intercepting and proxying API traffic. Multiple Charon clients are configured to communicate together to reach consensus on validator responsibilities and work together as a unified proof-of-stake validator.
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Obol Managers, a set of solidity smart contracts used to form distributed validators.
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Obol Testnets, a set of ongoing public incentivized testnets, enable operators of any size to test their deployments before serving the main Obol Network.
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In June 2022, Dev Net 1 will be launched, aiming to conduct grayscale testing with the earliest trusted operators.
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In July 2022, Dev Net 2 was launched to allow trusted operators to participate in testing.
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In October 2022, Athena Public Testnet 1 was launched. It is a non-incentive public testnet. This version is also the first time that Obol is open to the public. It is designed to allow more participants to help complete early inspections and find prevention. The witch's method.
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In June 2023, Circe Attack Net is expected to be launched. This is also the last test of the V1 phase, and a large number of test tools will be created to find damage points and vulnerabilities to Charon.
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It is worth noting that Obol will launch the V2 version probably after Circe Attack Net. Compared with V1, V2 based on Charon will join the incentive plan to ensure that any operator who is not online and does not participate in verification will not receive any rewards. This version can also be regarded as the official launch of Obol products.
Investment and financing situation:
At present, Obol Labs’ cumulative financing amount has reached US$19 million.
In September 2021, Lido awarded Obol a $100,000 LDO grant to continue researching and building on the protocol.
In October 2021, Obol completed US$6.15 million in financing, with investors including ConsenSys, Acrylic Capital, Coinbase Ventures, IOSG Ventures, Blockdaemon, Delphi Digital, Stakefish, Figment Fund, Chorus One, Staking Facilities and The LAO.
On January 17, 2023, Obol completed a $12.5 million financing, co-led by Pantera Capital and Archetype, with participation from Coinbase Ventures, Nascent, BlockTower, Placeholder, Ethereal Ventures, Spartan and IEX, as well as direct participation from top Validators, such as Stakely, Cosmostation, Kukis Global, Swiss Staking, Swift Staking, Blockscape and DSRV.
Ether.Fi
Official website:
Twitter:
More information:
https://app.vedao.com/projects/d93118d151f72b2a729ec0c1d3ff8f7ee61d7c218754c2c5d709de19f2a50bba
Project Description: Ether.Fi is a non-custodial liquidity staking platform that allows users to maintain control of their keys while delegating Ethereum validator operations to node operators. Every validator generated through its protocol will be represented as an NFT. Ethereum stakers who deposit at least 32 ETH will hold the NFT, which represents a financial interest for the validator. Once the liquidity pool and protocol fund management smart contracts are implemented, this NFT can be divided.
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The first stage, entrusted pledge: In April this year, after the ETH Shanghai upgrade, the Ether.Fi main network was launched, and the entrusted pledge function was simultaneously launched.
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If a staker wishes to stake 32 or a multiple of 32 ETH, follow the following workflow:
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Node operator proposes price
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The pledger deposits the corresponding ETH into the contract and simultaneously mints two withdrawal NFTs (T-NFT, B-NFT). T-NFT represents 30 (or corresponding multiples) ETH and can be transferred; B-NFT represents 2 (or corresponding multiple) ETH as SBT. The only way to recover 2ETH is for the validator to quit.
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The staker encrypts the validator secret key using the node operator's public key.
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The node operator starts the validator using the decrypted validator key.
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Stakers or node operators can withdraw at any time.
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The second stage, liquidity pool: will be launched in Q2 or Q3 this year.
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If the staker holds less than 32 ETH, or does not want to take on the responsibility of monitoring the validator node, he or she can participate in Ether.Fi staking by casting notes eETH in the NFT liquidity pool.
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The third stage, the permissionless node market: will be launched in Q4 this year or Q1 in 2024.
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NFT represents the economic value of staking ETH, allowing it to create a programmable layer on top of staking infrastructure by creating economic incentives for node operators and staking. Not yet available.
Investment and financing status: On February 28 this year, Ether.Fi completed its first round of financing, with a financing amount of US$5.3 million. Investors include Chapter One, North Island Ventures, Arrington XRP Capital, Maelstrom, Node Capital, Version One, and Purpoes Investments.
EigenLayer
Official website:
Twitter:
https://twitter.com/eigenlayer
More information:
https://app.vedao.com/projects/106f792d028941e7291b025da0d5b304ba5ed4256470a985bd438ad0aaf057c0
Project introduction: EigenLayer is a set of smart contracts on Ethereum that allows ETH stakers to choose to verify new software modules built on top of the Ethereum ecosystem. Stakeholders opt-in by granting the EigenLayer smart contract the ability to impose additional slashing conditions on their staked ETH, allowing for expanded cryptoeconomic security.
By opting in to EigenLayer, stakers can verify multiple types of modules, including consensus protocols, data availability layers, virtual machines, guardian networks, oracle networks, bridges, threshold encryption schemes, and trusted execution environments. Rather than spreading security across modules, EigenLayer aggregates ETH security across all modules. This improves the security of decentralized applications (DApps) that rely on modules.
Additionally, the value of Ethereum has increased due to the new fee-sharing opportunities provided by these multi-format modules. EigenLayer also serves as Ethereum's grading system, allowing new innovations to be field-tested in multiple variations, such as Danksharding and proposer/builder separation, before the best ideas are integrated back into Ethereum.
EigenLayer introduces the re-staking model: the protocol creates an opt-in middle layer on which users are allowed to deposit staked ETH into smart contracts, agreeing to grant EigenLayer additional execution rights. That is: transfer the management rights of pledged ETH to EigenLayer to obtain more benefits. Such a network can be regarded as a collective sub-network among many Ethereum stakers and Validators who voluntarily choose to join Re-staking, sharing security with Ethereum. Opt-in in this network will lead to many consequences: for example, providing additional verification services will be able to obtain additional verification revenue. A Token has multiple roles. It can be both a pledge Token and a verification Token.
The result of multiple roles means that staking users can obtain multiple benefits. According to the EigenLayer white paper, there are several forms of re-pledge in EigenLayer:
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Native re-staking: Validators can re-stake their ETH by pointing their withdrawal credentials to the EigenLayer contract.
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LSD re-staking: Validators can re-stake by staking their LSD (ETH that has been staking through protocols such as Lido and RocketPool) by transferring their LSD into the EigenLayer smart contract.
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ETH LP re-pledge: Validator pledges a pair of LP tokens containing ETH.
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LSD LP re-staking: Validator pledges a pair of LP tokens containing one liquidity staked ETH token.
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In addition, EigenLayer has also set additional slashing conditions for the above-mentioned mortgage ETH that continues to exist in the consensus layer to bear corresponding risks and impose fines for malicious behavior.
Investment and Financing Status: Up to now, EigenLayer has completed two rounds of financing:
In August 2022, EigenLayer completed a seed round of financing of US$1.45 million, with participating investors including: Polychain _, Ethereal Ventures_ , Figment Capital, dao5, Robot Ventures, P2P Validator, Anthony Sassano, Viktor Bunin, Mara Schmiedt, Tim Beiko , Marc Bhargava, Zaki Manian, Joe Lallouz, Jon Charbonneau.
On March 28 this year, EigenLayer completed another $50 million in Series A financing at a valuation of $500 million. Investors include: Blockchain Capital*, Coinbase Ventures, Hack VC, Electric Capital, Polychain, Bixin Ventures, IOSG Ventures , Finality Capital Partners.
Tenderize
Official website:
Twitter:
https://twitter.com/tenderize_me
More information:
https://app.vedao.com/projects/4bc6dd7f32b3545f8ce775133b99ee9e68440ad1684d33166d85d1c383deac09
Project Introduction: Tenderize is a pledged derivatives protocol that allows users to mortgage loans and trade tokens while maintaining positions in pledged assets. With this added flexibility, the company believes it can unlock the full utility potential of staking assets, with the ultimate goal of enabling permissionless liquid staking. Currently deployed on ETH/Arbitrum, it supports the liquid pledge of four assets: $MATIC/ $GRT/ $AUDIO/ $LPT. So far, Tenderize has deposited up to US$1.68 million in TVL, and its annualized return has reached a maximum of 24%.
Similar to most liquid pledge protocols, users deposit the native assets supported by the protocol into Tenderize and obtain an equal amount of pledge certificate T-Asset. T-Asset represents the ownership of the user's native assets and can be traded, transferred, and LP made to obtain DeFi income. Tenderize plays the role of a trustee, and user assets are collected and entrusted to node operators.
Tenderize V1 will extract 10% of the node staking income, 5% of which will flow to the Tenderize treasury (most of which will be used to increase LP liquidity), and 5% will be used to incentivize LP. Tenderize is about to iterate to the V2 version, which is expected to be launched in the first half of this year. At that time, the revenue from the extraction nodes will drop to 0-0.5%, and all of this revenue will be used to incentivize LPs.
As of now, the Tenderize protocol has not issued coins, but according to the white paper information, the protocol will clearly issue the native token TENDER. TENDER will mainly serve as the protocol governance token and have voting rights.
Investment and financing status: On July 7, 2022, Tenderize completed a seed round of financing of US$3 million. Investors include: Eden Block*, TRGC, Figment Capital, Encode Club, Daedalus, and Syndicate.
Summarize
DeFi is the Lego cornerstone of the crypto world. Every time a new concept emerges, it will bring huge wealth effects and profound changes to the development of the industry. From the DeFi Summer brought about by liquidity mining, to the liquidity war caused by Curve, and now LSD’s liberation of the liquidity of pledged tokens. The progress of DeFi will continue to extend outward, extending to specific applications such as games and social networking, forming new ways of playing. In fact, the slow development of concepts including GameFi and SocialFi in the past year is largely due to the stagnation of the core mechanism DeFi model. The development of the LSD concept this time will be of great help to the development of DeFi ideas. At the same time, this power will also be transmitted, thus leading to new prosperity from bottom to top, from the basic layer to the application layer.
This is why more and more projects are beginning to move closer to LSD, whether it is CEX, DEX, or lending platforms, as long as their business involves depositing and withdrawing ETH. Even the Web3 crowdfunding platform Gitcoin, which has always been known as the Web3 arsenal, has begun to turn to LSD. On February 27 this year, Gitcoin passed a governance vote to launch gtcETH, and had a diversified LSD ETH index concept.
https://twitter.com/indexcoop/status/1629943732668624901
LSD has become the core narrative of the crypto market. The market size of LSD still has room for growth. Although some people are worried that the ETH unlocked after the Ethereum Shanghai upgrade will experience selling pressure, the LSD track will still have better data performance overall.
So, where are the opportunities now? Either choose a decentralized LSD service platform or choose LSD-Fi products. Or just go for it in one step and choose the high-quality LSD Alpha that has not yet issued coins.
references:
https://mp.weixin.qq.com/s/ioEjGOZqCch-eTwg7OxiHA
https://www.odaily.news/post/5185382
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