1/ Introducing the LSD Endgame💥
#ETH Liquid Staking Derivatives is the hottest narrative of 2023 but hard to keep up with. Feeling lost? I've crafted the LSD Endgame series just for you.
It all starts with the DIALECTS framework I've created to evaluate LSDs. Let's dive in🧵👇
#ETH Liquid Staking Derivatives is the hottest narrative of 2023 but hard to keep up with. Feeling lost? I've crafted the LSD Endgame series just for you.
It all starts with the DIALECTS framework I've created to evaluate LSDs. Let's dive in🧵👇
2/ DIALECTS stands for:
𝗗ecentralization 🌐
𝗜ncentives 💸
𝗔PR 📈
𝗟iquidity 🐳
𝗘xperience 🏎
𝗖ommunity 🫂
𝗧VL/𝗧ime ⛰⏳
𝗦ecurity 🔒
These encompass all of the critical aspects of a successful LSD. Let's break each one down and point out protocols doing them well👇
𝗗ecentralization 🌐
𝗜ncentives 💸
𝗔PR 📈
𝗟iquidity 🐳
𝗘xperience 🏎
𝗖ommunity 🫂
𝗧VL/𝗧ime ⛰⏳
𝗦ecurity 🔒
These encompass all of the critical aspects of a successful LSD. Let's break each one down and point out protocols doing them well👇
3/ 𝗗ecentralization 🌐
How permissionless and distributed are the nodes?
An important topic as Lido's centralization threatens ETH.
@Rocket_Pool is the leader in decentralization with 3k+ unique node operators.
@staderlabs is a new addition and @fraxfinance will join soon.
How permissionless and distributed are the nodes?
An important topic as Lido's centralization threatens ETH.
@Rocket_Pool is the leader in decentralization with 3k+ unique node operators.
@staderlabs is a new addition and @fraxfinance will join soon.
4/ 𝗜ncentives 💸
Incentives are a way to entice users to stake.
The king of incentives is @swellnetworkio. Despite being a new LSD, Swell has attracted almost 50k ETH through their Pearl incentives, recently kicking off Chapter 2.
Incentives are a way to entice users to stake.
The king of incentives is @swellnetworkio. Despite being a new LSD, Swell has attracted almost 50k ETH through their Pearl incentives, recently kicking off Chapter 2.
5/ 𝗔PR 📈
Annual Percentage Rate is the return an LSD gives per year and is one of the most important factors for a successful LSD.
The leader in LSD APR by far is @fraxfinance $sfrxETH, beating YTD returns from Lido by 30%+ and RocketPool by 50%+!
Annual Percentage Rate is the return an LSD gives per year and is one of the most important factors for a successful LSD.
The leader in LSD APR by far is @fraxfinance $sfrxETH, beating YTD returns from Lido by 30%+ and RocketPool by 50%+!
6/ 𝗟iquidity 🐳
No whale wants to encounter slippage when moving into and out of an LSD so deep liquidity is important. Lido and Frax have the ability to move millions of $ in and out through @CurveFinance with minimal slippage. Protocols can also offer direct redemptions.
No whale wants to encounter slippage when moving into and out of an LSD so deep liquidity is important. Lido and Frax have the ability to move millions of $ in and out through @CurveFinance with minimal slippage. Protocols can also offer direct redemptions.
7/ 𝗘xperience 🏎
Experience represents the many qualitative aspects of the staking experience: website design, ease of staking/unstaking, and dashboards. Two LSDs may give the same returns, but if one feels like a Ford and the other feels like a Ferrari, the choice is easy.
Experience represents the many qualitative aspects of the staking experience: website design, ease of staking/unstaking, and dashboards. Two LSDs may give the same returns, but if one feels like a Ford and the other feels like a Ferrari, the choice is easy.
8/ 𝗖ommunity 🫂
It wouldn't be crypto without community. In this respect, decentralized LSDs like @Rocket_Pool often have a community advantage by design. This is also why it's easier for existing protocols to break into the space than one starting from scratch.
It wouldn't be crypto without community. In this respect, decentralized LSDs like @Rocket_Pool often have a community advantage by design. This is also why it's easier for existing protocols to break into the space than one starting from scratch.
9/ 𝗧VL/𝗧ime ⛰⏳
Having a lot of value locked tends to attract more value as people associate TVL with security. This is one reason why slowing Lido's growth is proving difficult.
Checked all the other boxes but low TVL? The LSD may just need Time.
Having a lot of value locked tends to attract more value as people associate TVL with security. This is one reason why slowing Lido's growth is proving difficult.
Checked all the other boxes but low TVL? The LSD may just need Time.
10/ 𝗦ecurity 🔒
Last but certainly not least, security. LSD protocols are entrusted with many millions of dollars. It's important that any major LSD has gone through serious and regular audits of all code and updates. Bug bounty programs are also a great idea.
Last but certainly not least, security. LSD protocols are entrusted with many millions of dollars. It's important that any major LSD has gone through serious and regular audits of all code and updates. Bug bounty programs are also a great idea.
11/ There you have it! The DIALECTS framework for evaluating LSDs. It's more than just APR. What do you think?! Leave a comment and I'll respond.
Over the next few weeks I will be showing how top LSDs measure up, so follow me @StableScarab for more LSD and crypto content.
Over the next few weeks I will be showing how top LSDs measure up, so follow me @StableScarab for more LSD and crypto content.
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