Thread by @0xYugiAI

LSD is a long-term thing

This year, #LSDfi has emerged as the hottest narrative, and it's more than just hype. It is now becoming a new reality for #DeFi.

Here are several reasons why LSD is a long-term trend. 🧵👇 1/17

This thread covers the following:

1. Safe rate
2. DeFi / LSDfi
3. Institutional investors
4. Network security

5. Closing thoughts

1. Safe rate

The age of high-yield farming with extensive incentive programs is gradually fading. It's becoming increasingly challenging to secure high returns.

In contrast, Liquid Staking offers a means of achieving passive income with minimal risk.

The presence of low-risk and liquid instruments within an ecosystem signifies a mature market.

In this context, LST can be compared to government bonds, which provide a stable yield with minimal risk.

Essentially, the staking rate can be considered as a Safe rate for the ecosystem.

Liquid Staking is evolving into a standard for yield and a foundation for ecosystem development.

2. DeFi / LSDfi

Liquid staking has unlocked the liquidity of staked tokens, allowing them to be used in DeFi just like regular tokens.

LSD has created a new niche within DeFi – #LSDfi, protocols built on top of liquid staking derivatives.

https://twitter.com/0xYugiAI/status/1660729431999254528

LSDfi develops the DeFi Lego concept.

This approach allows you to stake your tokens in one app, then reinvest them in another to earn compounded income.

It's like building your own personalized financial construction.

Liquid Staking fosters DeFi development. It boosts liquidity, spurs the growth of existing DeFi applications, and triggers the emergence of entirely new ones.

LST has been an integral part of many DeFi protocols.

For instance, now there are a lot of LSD stablecoins.

https://twitter.com/0xYugiAI/status/1668871313988141056

3. Institutional investor

Liquid staking has become increasingly attractive for institutional investors due to its enticing combination of low risk and high liquidity.

Liquidity is widely recognized as one of the significant challenges in DeFi. Not every protocol can handle large investments due to market impact and slippage.

Liquid staking appeals to institutional investors because it can handle significant investment amounts.

Native token is the most liquid thing that can be in any ecosystem.

Therefore, for institutional investors, investing in the native token and utilizing LSD is highly attractive.

Furthermore, liquid staking operates on a decentralized and transparent working scheme.

Liquid staking is better equipped to withstand regulatory pressure thanks to its decentralization and transparency.

4. Network Security

Liquid staking offers an opportunity for everyone to contribute to blockchain network security. It eliminates the need for complex technical requirements and large token amounts typically required for staking.

As more people stake their tokens, the security of the entire network increases.

This is precisely how liquid staking directly makes the blockchain more secure.

One of the LSD trends is Permissionless Node running. This approach allows anyone to run their own node using a ready-made infostructure for staking.

This approach will contribute to the decentralization of staking and, thus, the network's security.

5. Closing thoughts

Liquid staking is now a fundamental element of any PoS blockchain. It encompasses a wide range of areas, from network security to the development of DeFi.

It isn't easy to imagine the growth of any ecosystem without the presence of liquid staking.

LSD is becoming a long-term trend.

While Ethereum currently leads the way, this trend is expected to expand to other networks.

I tag people who might be interested:

@0xFinish
@arndxt_xo
@ViktorDefi
@Defi0xJeff
@Moomsxxx
@0xsurferboy
@CryptoShiro_
@My_SexyLife
@CryptoKoryo
@poopmandefi
@rektdiomedes
@Crypto_Scient
@CryptoGideon_
@Flowslikeosmo
@0xCrypto_doctor