After the Ethereum Shanghai upgrade, the number of pledged ETH hit a new high, and the unstable factor of LSD (liquidity pledge derivatives) not being redeemable was eliminated. LSDFi ushered in rapid development. Existing DeFi projects were limited by factors such as the inability to upgrade the code or slow project updates. New LSDFi projects emerged, bringing LSDFi Summer. In the following, PANews will review the recent LSDFi projects worth paying attention to in various categories. The data in this article are all counted on June 9.
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 minting eUSD (calculated based on the minted eUSD) is 31.39%, the APR of eUSD/USD LP is 13.68%, the APR of LBR/ETH LP is 147.07%, and the APR of staking LBR is 60.3%. Since the intrinsic value of eUSD will continue to rise; it is relatively safe to mint through over-collateralization; and it can participate in liquidity mining. Therefore, the price of eUSD tends to be higher than its intrinsic value, and there was a 3% premium. The LSD income lost by the eUSD minter is 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.
https://www.prismafinance.com/Prisma allows users to pledge wstETH (Lido), cbETH (Coinbase), rETH (Rocket Pool), sfrxETH (Frax), and WBETH (Binance) to mint stablecoin acUSD. Its code base is based on Liquity.
Prisma has not yet been officially launched, but because it has received support from founders of Curve, Convex, Frax, Conic, CoinGecko, and other well-known exchanges, project parties, and KOLs, it may also develop into the "end game of liquid staking tokens (LST)". For stablecoin projects, liquidity is crucial. After obtaining the support of teams such as Curve, Convex, and Frax, it may have more advantages in this regard. If you pledge LST in Prisma to mint stablecoins, and provide liquidity in Curve through Convex, you will get CRV, CVX, PRISMA tokens, ETH staking income, and stablecoin LP transaction fees at the same time. In addition, the project uses the veToken model, and vePRISMA holders can vote to decide the emission of PRISMA to incentivize the stablecoin LP tokens.
Currently, the Tenet mainnet has been launched, but no data has been seen. The project has also established a full-chain bridge dedicated to LSD with Layerzero, and its native token also uses the veToken mechanism.
Raft
Raft allows users to over-collateralize stETH or wstETH to mint the stablecoin R. R currently has three liquidity pools, namely the Balancer R/wstETH pool, the Balancer R/DAI pool, and the Uniswap v3 R/USDC pool.
Raft’s feature is that it supports flash loans (here called Flash Mint), which can increase leverage by up to 11 times at a time. It can mint stablecoins R far exceeding the collateral at one time, and convert R into wstETH, then deposit wstETH into the protocol as collateral, mint stablecoins R, and repay debts. 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 a drop in the price of the collateral.
Raft has investments from Lemniscap, Wintermute, Jump Crypto, GSR, etc. The project has only been online for 4 days and has not yet issued a governance token, probably due to the expectation of airdrops. The TVL has reached 31.04 million US dollars and the stablecoin minting volume is 16.85 million R.
Instadapp Lite v2
Instadapp is a project that promotes interoperability between DeFi. Instadapp Lite v1 has ETH only for Aave v2, but this strategy cannot keep up with the development of LSDFi after the Shanghai upgrade. To this end, Instadapp launched Lite v2, a Vault designed for a variety of stETH-related strategies and limited to ETH deposits. Lite v2 will use Aave v2, Aave v3, Morpho, Compound, Euler and other lending markets to mortgage wstETH to borrow ETH, exchange it for wstETH, and recycle operations to obtain enhanced LSD returns. Instadapp extracts 20% of the returns, and depositors can also get slightly higher returns than Lido stETH.
ETH depositors will receive a deposit certificate iETH. According to Defi Mochi statistics, the TVL of Lite v2 is 58.1 million US dollars, second only to Lybra in LSDFi.
unshETH
unshETH is a liquidity center for LSD. In projects such as Curve, LSDs such as stETH are usually traded in pairs with ETH, but there are no trading pairs between different LSDs (direct transactions can also be achieved through routing).
This type of project allows users to deposit different LSDs such as wstETH and sfrxETH to obtain deposit certificates, and in unshETH, it is to mint unshETH. In addition to obtaining LSD income for ETH, holding unshETH can also obtain transaction fees and minting/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 staking yield of unshETH is 11%, of which 6.78% is the mining reward of the native token USH.
There are many liquidity-related LSDFi projects, such as the early LSDx, etc. The principles are roughly the same. UnshETH is currently the most widely used one, and I will not go into details about other projects here.
summary
The LSDFi track is currently developing rapidly, with various new projects emerging, and projects such as Lybra have also brought about a wealth effect. However, the functions of most projects seem to be only a subset of mainstream DeFi projects, such as the function of borrowing stablecoins based on Liquidity code collateral LSD, which can also be achieved in MakerDAO and Aave. Among the liquidity of LSDFi, Curve and Balancer are still more attractive.
