Original author:The DeFi Investor
Compilation of the original text: Deep Tide TechFlow
Original author:
Compilation of the original text: Deep Tide TechFlow
A new narrative has emerged in DeFi. The upcoming Ethereum upgrade will have a huge impact on liquidity staking protocols. Here’s why I think liquidity staking is a growing trend, and the opportunities to invest in it.
First, what's so interesting about Ethereum's Shanghai upgrade? (coming soon in March)
Once the upgrade is complete, pledged withdrawals for $ETH will be enabled. Many are skeptical about committing $ETH since withdrawals are not currently possible.
This is why only 14% of the ETH supply is staked. In contrast, most L1s have a stake ratio of 40% or more.
Here's where things get interesting: If more people will stake ETH after the Shanghai upgrade (which is quite possible), most will opt for liquid staking derivatives.
Revenue rises -> their tokens benefit too.
$LDO
secondary title
advantage:
Lido is the largest $ETH liquidity staking provider. It charges a 10% fee on staking rewards. A portion of this fee is sent to the DAO treasury.
advantage:
It is the fifth most undervalued protocol based on the price-to-fee ratio.
shortcoming:
shortcoming:
$RPL
secondary title
advantage:
The second largest liquidity staking protocol.
advantage:
$RPL has a low inflation rate (5%).
shortcoming:
shortcoming:
$SWISE
secondary title
advantage:
Another liquidity staking protocol.
advantage:
Anyone can stake $SWISE for a percentage of protocol revenue.
shortcoming:
Anyone can join as a node operator (more decentralized).
Not popular enough for mainstream users.
$FXS
secondary title
advantage:
A protocol to build an ecosystem of DeFi products around $FRAX and $FPI. $frxETH (FRAX's $ETH liquid collateralized derivative) was launched a few months ago and has experienced tremendous growth since then.
advantage:
Curve offers $frxETH with an attractive yield.
shortcoming:
8% of $ETH staking proceeds are shared with $veFXS holders.
shortcoming:
$frxETH is relatively new and not as popular as other liquid staking derivatives.
