The Power of Interest-Bearing Assets: Ethereum Staking and the Rise of LSDfi

After the DeFi boom in 2020, excessive leverage expansion caused the market to burst, making most DeFi innovation disappear. Now, only leading projects in subdivisions such as lending and DEX are left to survive steadily. However, with the rise of Ethereum's Liquidity Staking (LSD), the emergence of assets based on the underlying interest-bearing capacity has opened the way for a new wave of LSDfi.

LSD has become one of the major DeFi trends, providing consistent, low-risk passive income while helping to maintain the blockchain network. Although most of the innovations in DeFi have died away, LSD has found a new way forward with its unique capabilities and potential. If this trend continues, LSD and LSDfi may lead a new round of growth in DeFi, bringing more innovations and opportunities.

This article covers the following:

1. LSD fi
2. Classic DeFi
3. LSD Basket
4. LSD income strategy
5. Stablecoins
6. Conclusion

LSDfi

**LSDfi is a set of LSD-based protocols, which may include classic DeFi protocols such as DEX and lending, as well as more complex protocols that utilize unique LST properties. As LSTs become widely adopted, they will play an important role in DeFi. **

Liquidity staking projects establish a foundational layer in DeFi. The next layer includes projects built on top of LSD, creating more complex products.

LSD has become the main category of TVL, with Lido becoming the biggest item. It stands to reason, therefore, that LSD plays a key role in driving the growth of the entire DeFi ecosystem.

DeFi integration is an important trend in the LSD industry. In fact, LSDfi is the result of this evolution. As this trend continues to gain momentum, LSD is becoming one of the major forces in DeFi.

Trends in LSDfi Now, LSDfi has grown into an entire industry within DeFi that is actively developing. This includes not only classic DeFi protocols, but more complex ones as well.

For example, Baskets, Stablecoins, Yield Strategies, and more.

LSDfi ecology: Maximize LSD income through DeFi Lego ## Classic DeFi new business

LSD has long been an important part of classic DeFi. Many LSTs can be used as collateral and traded on DEX. With the increasing popularity of LSD, we can expect the emergence of DEXs or aggregators tailored for LSD.

Examples of LST classic DeFi:

• $stETH as collateral in @AaveAave
• LSD pool in @CurveFinance
• LSD Vaults (Vaults) in @yearnfi

For example, some LSD-focused protocols include @LSDxfinance, which is similar to Curve, and @catinaboxfi, which is a lending protocol.

LSD Basket

For ETH, there are numerous liquid collateral solutions, so a protocol exists to combine them into a basket, creating an index. This method allows risk diversification and makes investing in LSD more convenient.

Some LSD Baskets:

• @indexcoop - Introduced two LSD indices, dsETH and icETH.
• dsETH includes top-tier ETH LSTs, while $icETH uses leverage.
• @unsheth_xyz - Launched $unshETH containing top ETH LST.
• @asymmetryfin - Deposit ETH and get $safETH backed by TOP3 LST.

LSD Profit Strategy

LSD is a token that generates income continuously. Naturally, you can develop a strategy around it. For example, distributing it to different pools, as collateral, using leverage, managing staking rewards.

Yield Strategy Agreement

• @0xAcidDAO lets you stake ETH into diverse baskets derived from the original LST and various strategies.
• @parallaxfin is a leveraged LSD income strategy platform designed to integrate multiple LSTs.

Another method, @pendle_fi, offers a unique approach: it's a platform to buy futures.

You can buy ETH at a discount and receive it later while investing it in designated LST.

Asymmetric Yield Agreement

@asymetrix_eth is an asymmetric revenue distribution protocol generated by staking. This is similar to a lottery, where some winners share in all wagering rewards for that period.

Inspired by Premium Bonds, follows a similar logic.

LSD based stablecoin

Using LSD as a hyper-collateralized stablecoin is a very logical choice. LSDs will continue to generate income from staking, making these yield-yielding stablecoins. In this case, everything is backed by ETH.

Stablecoin backed by LSD

• $eUSD provided by @LybraFinanceLSD
• $aUSD provided by @agility_lsd
• $R provided by @raft_fi

Conclusion

LSD has become the standard for any PoS ecosystem and is already one of the major DeFi trends.

LSD generates consistent, low-risk passive income and helps maintain the blockchain.

**LSDfi is a logical extension of LSD. It creates an overall economy that, on the one hand, can generate a lot of income and, on the other hand, simplifies the interaction with the LSD project. **

LSDfi will continue to evolve, and we will gradually witness an increase in the complexity and uniqueness of the project. Let's watch its progress in the future.

In this article, I have selected the most interesting projects. But maybe you know better.

I will be very happy to receive your suggestion.