Inventory of LSDFi classification and 8 early projects worthy of attention

Author: Jiang Haibo, PANews

After the upgrade of Ethereum Shanghai, the number of pledged ETH hit a new high, and also eliminated the unstable factor that LSD (liquid mortgage derivatives) could not be redeemed. LSDFi is ushering in rapid development. Existing DeFi projects are limited by factors such as code upgrades or slow project updates. New LSDFi projects emerge, bringing LSDFi Summer. In the following, PANews will take stock of recent LSDFi projects worthy of attention in each category. The data in this article are all collected on June 9.

Stablecoins

Lybra Finance

Lybra is an LSDFi project that is currently in the limelight, and its native tokens have increased by more than 40 times and have attracted a lot of attention. In Lybra, stablecoins can be minted by staking ETH and stETH (ETH will also be converted to stETH). eUSD is an interest-bearing asset, and the LSD income generated by ETH and stETH will be distributed to eUSD.

Lybra is also a project with high mining income in LSDFi. As of June 9, DeFiLlama shows that Lybra’s TVL is 186 million US dollars. The official website shows that the APR of minted eUSD (calculated by minted eUSD) is 31.39%, eUSD/USD LP The APR of LBR/ETH LP is 13.68%, the APR of LBR/ETH LP is 147.07%, and the APR of pledged LBR is 60.3%.

Since the intrinsic value of eUSD will continue to rise; it is relatively safe to cast through excess collateral; and it can participate in liquidity mining. Therefore, the price of eUSD tends to be higher than its intrinsic value, and there used to be a 3% premium. The LSD income lost by the eUSD minters will be compensated by the additional issuance of tokens.

Another feature of Lybra is the token economy. In addition to the native token LBR, the mining output is esLBR. It takes one year for esLBR to be 100% unlocked into LBR. If you choose the fastest unlocking speed (one month), you can only get 20% of LBR.

Prisma Finance

Link:

Prisma allows users to mortgage wstETH (Lido), cbETH (Coinbase), rETH (Rocket Pool), sfrxETH (Frax), WBETH (Binance) to mint the stablecoin acUSD, and its codebase is based on Liquity.

Prisma has not yet been officially launched, but because of the support of the founders of Curve, Convex, Frax, Conic, CoinGecko, etc., as well as other well-known exchanges, project parties, and KOLs, it may also develop into the end of the “Liquid Staking Token (LST)” game". For stablecoin projects, liquidity is very important. After receiving the support of teams such as Curve, Convex, and Frax, it may have an advantage in this regard. If you mortgage LST in Prisma to mint stablecoins, and provide liquidity in Curve through Convex, you will get CRV, CVX, PRISMA tokens, ETH pledge income and stablecoin LP transaction fees at the same time.

In addition, the project uses the veToken model, and vePRISMA holders can vote to determine the emission of PRISMA to incentivize the LP tokens of the stable currency.

Layer 1 Blockchain

Tenet Protocol

Tenet is a Layer 1 blockchain that includes the functions of LSD and LSDFi at the same time. It can provide liquid pledge services, and can also mint the stable currency LSDC through various LSD. It introduces a Diverse Proof-of-Stake mechanism (DiPoS) that enables various LSDs to be used as collateral for Tenet network validators, eliminating the risk of the network being owned by the control of a single asset.

At present, the main network of Tenet has been launched, but there is no data. The project also established a full-chain bridge dedicated to LSD with Layerzero, and its native token also uses the veToken mechanism.

Leverage class

Raft

Raft allows users to over-collateralize stETH or wstETH to mint stablecoin R. R currently has three liquidity pools, namely Balancer R/wstETH pool, Balancer R/DAI pool and Uniswap v3 R/USDC pool.

The feature of Raft is that it supports flash loans (here called Flash Mint), which can increase the leverage by up to 11 times at one time. It can cast a stable currency R that far exceeds the collateral at one time, and convert R into wstETH, and then deposit wstETH into the agreement. As collateral, the stablecoin R is minted to repay the debt. Even if there is no need for high leverage, this function is very efficient if the loan needs to be repaid in time to avoid liquidation due to the fall in collateral prices.

Raft has investments from Lemniscap, Wintermute, Jump Crypto, GSR, etc. At present, the project has only been launched for 4 days and has not issued governance tokens. It may be due to airdrop expectations. The TVL has reached 31.04 million US dollars, and the stable coin minting volume is 16.85 million R.

Revenue class

Instadapp Lite v2

Instadapp is a project that promotes interoperability between DeFi. Instadapp Lite v1 has ETH only for Aave v2, but after the upgrade in Shanghai, this strategy cannot keep up with the development of LSDFi. To this end, Instadapp has launched Lite v2, an ETH deposit-only vault designed for a variety of stETH-related strategies. Lite v2 will use Aave v2, Aave v3, Morpho, Compound, Euler and other lending markets to mortgage wstETH to borrow ETH, convert it to wstETH, and recycle operations to obtain income-enhanced LSD income. Instadapp draws 20% of the income, and depositors can also get a slightly higher income than Lido stETH.

ETH depositors will receive iETH as a deposit certificate. According to Defi Mochi, the TVL of Lite v2 is 58.1 million US dollars, second only to Lybra in LSDFi.

Liquidity class

unshETH

unshETH is a liquidity center for LSD. In projects such as Curve, LSDs such as stETH usually form trading pairs with ETH, but there are no trading pairs between different LSDs (direct transactions can also be realized through routing).

This type of project allows users to deposit wstETH, sfrxETH and other different LSD to obtain deposit certificates, and in unshETH to mint unshETH. In addition to obtaining the LSD income of ETH, holding unshETH can also obtain transaction fees and casting/redemption fees.

Another feature of unshETH is the introduction of the concept of Omnichain, which can be used on the Ethereum mainnet, BNB chain and Arbitrum. At present, the TVL of unshETH is 38.56 million US dollars, and the pledge yield of unshETH is 11%, of which 6.78% is the mining reward of the native token USH.

There are many liquid LSDFi projects, such as the early LSDx, etc., and the principle is roughly the same. UnshETH is currently the most used one, so I won’t go into details about other projects here.

Future Earnings

Pendle

Pendle has been on the rise recently because of LSD. Users can use Pendle to divide income assets such as stETH into two parts, one is the PT token representing the principal, and the other is the YT token representing the income right. This method is similar to the separation of principal and interest of bonds in traditional finance. After minting, exchange YT tokens for PT tokens to get more principal at maturity.

Currently, among the ETH LSD products displayed on Pendle’s official website, the expiration time ranges from 19 days to 1664 days. Pendle’s LSD TVL is $44.85 million, ranking third.

Lottery

Asymetrix

Asymetrix provides asymmetric staking income, users deposit stETH into the agreement, and the agreement obtains staking income, but the income will not be distributed to everyone fairly, but a lucky person will be randomly selected through Chainlink VRF to distribute all the income. Everyone always keeps their principal and can withdraw at any time.

Asymetrix currently has a TVL of $18.62 million, a total of 346 users, and an average deposit amount of 29.27 stETH.

Summary

The LSDFi track is currently developing rapidly, with various new projects emerging, and projects such as Lybra have also brought wealth effects. However, the functions of most projects seem to be only a subset of mainstream DeFi projects. For example, the function of borrowing stable coins based on Liquidity code mortgage LSD can also be realized in MakerDAO and Aave. Among the liquidity of LSDFi, Curve and Balancer are still more attractive.

There are a lot of homogenization, and there are many opportunities for participation in the early stage, but it also leads to competition incentives, and many projects may fail in the competition.