Original author: Haotian
If the Lending platform of the POW public chain is the foundation of the ecosystem, then the LSD protocol of the POS public chain must hold the lifeline of the ecological development.
Recently, while the @Metis L2 decentralized sequencer process is still in full swing, it has also begun to spare no effort to support the development of LSD protocols such as @ENKIProtocol. The fundamental logic is here. There is no doubt that LSD will be the foundation for the Metis ecosystem to rise from the ground. Next, let me talk about my opinion:
1. The LSD (Liquid Staking Derivatives) protocol aims to allow ecosystem users to stake native platform tokens to POS mining nodes, thereby promoting the security and stable operation of the public chain platform. This is equivalent to the LSD protocol raising tokens from users to support the normal operation of nodes, and also allows users to participate in the POS mining reward process.
The basic threshold for building a decentralized Sequencer node on Metis is 20,000 METIS, which is a huge cost for node operators. If the LSD protocol first raises Metis assets and then allocates the corresponding pledged token quota to Sequencer Miner, it can not only lower the threshold for nodes to participate in decentralized Sequencer mining, but also provide native Staking income to users who pledge METIS. In the long run, a positive incentive flywheel for Sequencer Miner and LSD Staking will be formed: users pledge Metis to LSD - lower the threshold for decentralized Sequencer - more Sequencers participate in mining - token pledge rate increases, chain security consensus becomes stronger - drives token asset prices up - users want to pledge more to participate in LSD. To some extent, the development of the LSD platform is to further consolidate the decentralized Sequencer mining system.
Of course, LSD’s participation in Sequencer Miner will be subject to corresponding quota restrictions to ensure the balance of comprehensive capabilities such as node technology, operations, and marketing, and to avoid excessive concentration of resources, which violates the fundamental essence of a decentralized Sequencer.
In essence, this is similar to the logic of the POW public chain developing a lending platform. Miners can lend their mining income assets to the lending platform to obtain stablecoins to pay for the electricity bills required for mining, realizing a derivative financial gameplay that allows them to mine normally and cover costs without selling assets.
2. Metis is a layer 2 platform with METIS as its native token, and Enki Protocol is positioned as the first LSD protocol on the Metis platform. The native layer 2 token + native layer 2 LSD aims to bring a real source of liquidity staking income to the layer 2 platform? Why do you say that?
In the TVL impact war launched by @Blast_L2, Blast promised to give users not only points in exchange for tokens, but the biggest highlight is that Blast can stake the users' staked ETH to the layer 1 LSD protocol to obtain income and empower the layer 2 ecosystem.
In this scenario, layer 2 absorbs the native tokens from layer 1 across chains, and then the platform operators of layer 2 take them to layer 1 for staking and financial management to obtain returns. This is bound to confuse people. What is the meaning of the existence of layer 2?
If the LSD protocol on layer 2 can directly take over the possibility of obtaining stable returns from native assets on layer 2, layer 2 platforms like Metis will not only have the ability to generate revenue, but also as layer 2 platforms become interoperable, more liquidity from layer 2 platforms will flow in. Wouldn’t it be more logical for Enki to launch a TVL points reward mechanism similar to Blast by then?
If Blast uses the user's staked ETH to return to the main network to participate in Lido's staking, it is a unified asset management behavior of "institutions", and users cannot choose the final destination of the assets. When the feasibility of layer 2 LSD protocol staking is realized, there will be a large number of "retail investors" from various layer 2 platforms to cross layer 2 to do liquidity overflow management. Its future imagination space cannot be underestimated.
3. In order to stimulate the development of LSD protocol in Metis ecosystem, Metis launched Metis Liquid Staking Blitz (LSB) to accelerate the growth plan of many LSD protocols. In addition to Enki Protocol, this will continue to attract the rapid rise of LSD protocols including Artemis, and there will be more and more LSD on Metis. Following the development paradigm of Ethereum, after LSD, the Restaking mechanism is bound to appear at some point in time, further driving the refined management and implementation of layer 2 liquidity.
On Ethereum, the emergence of staking protocols such as LIDO, RockX, and SSV has raised the staking rate of ETH on layer 1 to 38%. On Metis, how much room for imagination will LSD protocols such as Enki Protocol bring to Metis?
Of course, the goal of Staking + Restaking is to lock in greater liquidity. The advantages of Metis are:
1. The two-way demand positive flywheel of Sequencer Miner + LSD protocol will form the mature fundamentals of Staking on Metis, just like the fundamentals of Eigenlayer are actually delivering the security consensus capabilities of the Ethereum mainnet to the emerging layer 2 chain. The value of Staking must eventually be implemented to be stable enough;
2. Metis has built a decentralized economy dedicated to the METIS native token, which is different from other traditional layer 2 models that use tokens as governance tokens, and is continuously exerting its self-sustaining ability in the process of building an ecosystem. If the layer 2 token only stays in the stage of attracting new users and governance, its purely incentive Tokenomics will hardly effectively empower the token holders.
At this point, everyone should have realized that Metis’s move to be the first to build a layer 2 native LSD Staking and future ReStaking platform actually has hidden ambitions.
While many layer 2s are opening up and sharing "modular" technology components and expanding their territory with Rollup As A Service, Metis has built a set of ecological liquidity sharing components of Rollup Ecosystem As A Service, attempting to deliver a decentralized economy of native token + native LSD as a "modular" commodity.
Note: Keep a close eye on the development of Metis' LSD protocol ecosystem, which is the cornerstone for the subsequent growth of the Metis ecosystem and the key to determining whether#METISwill usher in a second wave of value growth.
