Patrick | Dynamo DeFi Profile picture
Jun 6 23 tweets 8 min read Twitter logo Read on Twitter
Imagine a new financial primitive that’s yield bearing, deflationary, and secures the 2nd largest blockchain.

That’s liquid staked ETH.

Master thread on liquid staking, LSDs (no, not that kind), 10 LSDFi protocols, and how to research new protocols in this category. Image
First, some important terminology: Liquid Staking, LSD, and LSDFi.

Liquid Staking is when you stake a token, like ETH, through an intermediary. This has the benefits of allowing you to stake with less than the 32 ETH minimum and allowing you to sell your staked ETH at any time.
LSDs, sometimes called LSTs, are the tokens that you receive for liquid staking.

For example, @LidoFinance issues stETH to users that stake ETH through them. This stETH can be redeemed for ETH with a delay or sold.

LSD=Liquid Staking Derivative and LST=Liquid Staking Token. Image
The growth of Liquid Staking is a defining story in DeFi from the past year.

One year ago, LSDs had $9.1b in TVL compared to $32.0b in DEXes. At the start of 2023, LSDs had $8.7b in TVL, compared to $14.8b in DEXes.

Today LSDs have $19.4b in TVL, more than the $16.6b in DEXes. Image
That’s Liquid Staking. And it’s no surprise that liquid staking protocols like Rocket Pool and Lido Finance has been strong performers.

But what’s LSDFi?

LSDFi stands for Liquid Staking Derivative Finance. It refers to DeFi protocols that incorporate LSDs like stETH or rETH.
LSDFi protocols broadly incorporate LSDs in a few ways:

-Stablecoins collateralized by LSDs
-Mint synthetic ETH with LSD collateral
-LSD yield tokenization
-LSD yield optimization
-Lock LSDs to receive yield up front

Let’s look at 10 of the leading LSDFi protocols right now.
@pendle_fi separates out the yield portion of a yield bearing asset.

Yield bearing assets’ value is split between the underlying asset and that asset’s yield.

With Pendle, you can invest in the underlying asset at a discount or invest in only the yield and earn a higher APR.
@LybraFinanceLSD is an interest-bearing stablecoin, backed by LSDs.

Deposit ETH or stETH to mint eUSD. eUSD then earns yield, simply by sitting in your wallet.

How does it do this?

ETH staking rewards from depositors are swapped for eUSD and distributed back to eUSD holders.
@LybraFinanceLSD @OriginDeFi optimizes yield on liquid staked ETH.

Users deposit stETH, rETH or frxETH to mint OETH.

That OETH then earns yield through a combination of liquidity provision, staking, and reward tokens.
@unsheth_xyz is another LSD yield optimizer.

unshETH is a basket of ETH LSDs that earns yield both from staking and from people leveraging unshETH liquidity to swap between those LSDs.

Stake unshETH to earn additional USH token incentives.
@unsheth_xyz Note that unshETH was recently hacked, but user funds weren’t affected.

Here's a good recap from their AMA about the situation:
@gravitaprotocol allows you to borrow GRAI against your liquid staked ETH with a maximum fee of 0.5% and no interest.

Notably, Gravita also continues to allow you to earn staking rewards on your underlying collateral.
@catinaboxfi lets you deposit stETH and borrow synthetic boxETH.

The deposited stETH continues to earn yield, plus additional yield generated by debt in the system, while the borrower can unlock additional value by utilizing boxETH.

Yield is dynamic, varying based on your LTV.
@Flashstake allows you to claim ETH yield upfront, by locking your ETH, rETH, or stETH for up to 90 days.

You can unlock your principal by paying back a portion of your upfront yield.

Since crypto yields are highly volatile, this also allows you to lock in a fixed yield today.
@asymetrix_eth incorporates elements of gamblefi into liquid staking.

Yield from stETH on the platform is distributed to a random winner periodically. Even if you don’t win, you still earn over 20% APR from $ASX token rewards.
@raft_fi also features a stablecoin that’s overcollateralized by stETH.

Deposit your stETH, continue earning yield, and mint the $R stablecoin for a 0.01% fee.

Raft stands out by encouraging independent front-ends and by their plans to introduce one-step 11X leverage on stETH.
@ZeroLiquid_xyz is an upcoming LSD lending protocol.

They have a few promising features lined up to differentiate themselves.

With Zero Liquid, you’ll be able to use a variety of LSDs as collateral to mint synthetic ETH. They also plan to support liquid staked SOL and MATIC.
And new LSDFi protocols are launching everyday. If you want to make the most of this narrative, you need to be able to research them yourself.

Here are a few strategies to find LSDFi projects early, before they take off.
Use DefiLlama’s Token Usage page to track which protocols have a lot of stETH, rETH, and other LSDs deposited.
DeFi Mochi created this Dune dashboard to track LSD usage across a variety of LSDFi projects:
This thread lays out a ton of great builders and writers you can follow to stay up-to-date on LSDFi:
If you found this thread helpful, you’ll also enjoy my weekly newsletter, where I share the latest trends and tools in crypto. Subscribe at
Don't have time to read all this now? Here's the first tweet in this thread to bookmark so you can go back and reference it later.

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More from @Dynamo_Patrick

Jun 6
The SEC has requested a restraining order to freeze Binance US assets.

Many are concerned that this could spark a bank run on Binance US.

If you want to tune out the noise and DYOR, here are 3 tools you can use to track Binance US’ on-chain reserves and movements yourself 👇
The @DefiLlama CEX Transparency dashboard shows reserves over time and by token.

To access the dashboard, go to DefiLlama > CEX Transparency > Binance US

Toggle to ‘USD inflows’ to see flows by day.

Go to the ‘Assets’ page and scroll down to see a breakdown by token.
If you want to dive a bit deeper, @ArkhamIntel has a Binance US entity, which tracks over $800M of reserves.

On the left side of this page, view the reserves breakdown by token and chain.

On the right, view the ‘Balance History’ and a transaction log.
Read 6 tweets
May 29
If you conduct crypto research, @DefiLlama is one of the most powerful tools at your disposal.

In this thread, I’ll show you how to use DefiLlama to find growing chains with video demos. We’ll cover:

Bridge flows
DEX Volume

*Beginner friendly*
First, we have Total Value Locked (TVL), which can be thought of as deposits.

More TVL means that users have entrusted a project with more money. Moreover, for apps like DEXes, more TVL means more liquidity.

To see TVL by chain, select DeFi > Chains on the left.
At the top of the page, DefiLlama offers filters to prevent common issues with TVL.

First, the same TVL can be counted multiple times. This occurs when, for example, money is deposited into a liquidity pool and then into an autocompounder.

Ensure ‘Double Count’ is unchecked.
Read 12 tweets
May 29
ZK-Rollups are rapidly attracting liquidity and attention.

zkSync Era, Polygon zkEVM, and Starknet all hit an all-time high in TVL today.
zkSync Era TVL crosses $130m to hit a new high. Image
Polygon zkEVM TVL continues its rapid ascent to nearly $15m as of this morning. Image
Read 5 tweets
Mar 31
Over the past 24 hours, Trader Joe ($JOE) was the second highest DEX by volume across all of DeFi, exceeded only by Uniswap.

5 charts that show Trader Joe's massive recent growth 👇
Volume on Trader Joe yesterday exceeded $240M. In comparison, Trader Joe was doing less than $10M of volume daily in January.

This volume increase has been driven largely by Joe's expansion to Arbitrum, but Avalanche volumes are up as well.
In the past 24 hours and past 7 days, Trader Joe was the second highest volume DEX on Arbitrum.

In the past day, Joe's volume on Arbitrum was about 24% of that of Uniswap
Read 7 tweets
Mar 31
I analyzed 47 different AI cryptos to understand the current landscape of how these technologies are being combined.

Mega thread on the synergies between AI and crypto, why I think this narrative is here to stay, and my favorite 11 projects from those 47 🧵
First, why do I see the AI crypto narrative sticking around for awhile longer?

AI in general is gaining massive attention right now. This week has the highest Google search volume for AI ever. With the release of GPT-4, this attention is increasing.
With ChatGPT’s massive success, every tech company is rushing to roll out language model based products.

AI-generated images are beginning to make the rounds in mainstream social media circles. Both of these pictures made the rounds on Facebook, Instagram, and the news recently.
Read 26 tweets
Mar 23
The $ARB airdrop goes live tomorrow.

This has the potential to inject jet fuel into an already thriving ecosystem. To prepare, I looked at on-chain metrics, ARB allocations, and potential catalysts.

Here’s how I’m positioning myself in the Arbitrum ecosystem. 👇
First, a framework for what I’m looking for in Arbitrum projects.

I want protocols that meet multiple of these criteria:

-Favorable on-chain metrics
-Positioned to benefit from ecosystem growth
-High ARB allocation
-Upcoming catalyst
Being positioned to benefit from ecosystem growth could mean a few things.

It could mean that other projects are building on top of it, making it an ecosystem primitive.

Or that it otherwise benefits from the success of the entire ecosystem, such as being the leading DEX.
Read 11 tweets

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