Thread by @0xYugiAI

What is LSDfi?

#LSDfi is the most promising narrative in LSD and the entire #DeFi.

Interested in learning what it is and which projects it comprises?

Check out my thread about it below. 👇🧵 1/21

This thread covers the following:

1. LSDfi

2. Classical DeFi
3. LSD Basket
4. Yield Strategies
5. Stablecoins

6. Closing thoughts

1. LSDfi

This refers to a set of protocols based on LSD. These may include classic DeFi protocols such as DEXs and Lending and more complex protocols utilizing unique LST properties.

As LSTs gain wider adoption, they will play a significant role in DeFi.

Liquid Staking projects establish the foundational level in DeFi.

The next layer consists of projects that build upon LSD, creating more sophisticated products.

LSD has emerged as the primary category on TVL, with Lido taking the lead as the largest project.

As a result, it's only natural that LSD plays a crucial role in driving the growth of the entire DeFi ecosystem.

DeFi integration is a significant trend in the LSD sector. #LSDfi is, in fact, a result of this evolution.

As this trend continues to gain momentum, LSD is emerging as one of the primary forces within DeFi.

https://twitter.com/0xYugiAI/status/1631693240167432196

Now, #LSDfi has evolved into a whole sector within #DeFi, which is actively progressing. This includes not only classic DeFi protocols but also more complex ones.

For instance, Baskets, Stablecoins, Yield strategies, etc.

2. DeFi Classic

LSD has long been an integral component of classic DeFi. Numerous LSTs can be used as collateral and traded on DEXs.

Examples of LST Classical DeFi

• $stETH as collateral in @AaveAave
• Pools in @CurveFinance
• Vaults in @yearnfi

With the increasing popularity of LSD, we can anticipate the emergence of DEX or aggregators tailored specifically for LSD.

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

3. LSD Basket

There are numerous Liquid staking solutions for ETH, so, logically, a protocol exists to combine them into one basket, creating an index.

This approach allows for risk diversification and makes investing in LSD more convenient.

LSЕ Baskets

@indexcoop - Introduced two Index LSDs, $dsETH and $icETH.
$dsETH comprises top ETH LSTs, while $icETH utilizes leverage.

@unsheth_xyz - Launched $unshETH, a basket containing top ETH LSTs.

@asymmetryfin - Deposite ETH and get $safETH backed bt TOP3 LST.

4. Yield Strategies

LSD is a token that consistently generates income. Naturally, you can develop a strategy around it. For example, distribute it to different pools, utilize it as collateral, employ leverage, and manage staking rewards.

Yield Strategies protocols

@0xAcidDAO enables you to invest ETH into a diverse basket derived from the original LST and various strategies.

@parallaxfin is a Leveraged LSD Yield Strategy platform intending to incorporate numerous LSTs.

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

You can buy ETH at a discount and receive it later, all while it's invested in designated LSTs.

Asymmetric yield

@asymetrix_eth is a protocol for asymmetric yield distribution generated from staking. It's similar to a lottery, where a few winners share all the staking rewards for the period.

The inspiration was taken from Premium Bonds, which follows a similar logic.

5. Stablecoins

Using LSD for over-collateralized stablecoins is a highly logical choice. LSDs will consistently generate income from staking, making these yield-bearing stablecoins. In this case, everything remains backed by ETH.

Stablecoins backed by LSD

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

6. Closing Thoughts

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

LSDs generate consistent, low-risk passive income and contribute to maintaining the blockchain.

The LSDfi is a logical extension of the LSD. It creates an entire economy that, on the one hand, can generate substantial income and, on the other, simplifies interactions with LSD projects.

LSDfi will persistently evolve, and gradually we'll witness an increase in the complexity and uniqueness of projects.

Let's observe its progression in the future.

I've selected the most intriguing projects, in my opinion. However, maybe you're aware of others.

I would be delighted to receive recommendations.

I tag people who might be interested:

@0xOrli
@davgarai
@ViktorDefi
@arndxt_xo
@Subli_Defi
@Moomsxxx
@0xsurferboy
@CryptoShiro_
@My_SexyLife
@CryptoKoryo
@rektdiomedes
@Flowslikeosmo
@adamscochran
@GoneMultichain
@0xCrypto_doctor