About LSDx Financing

On March 17, 2023, LSDx officially released a tweet: LSDx, a protocol designed to optimize the financial value of liquid derivatives (LSD) assets, has received a strategic investment of US$2 million from the well-known investment institution Foresight Ventures. This investment is equivalent to 40 million LSDs, with a valuation of US$50 million, proving the potential of the project and Foresight Ventures' confidence in the team. To ensure transparency, LSDx has designed an unlocking mechanism for Foresight Ventures' strategic investment, where 25% of the tokens are unlocked immediately, while the remaining 75% will be unlocked linearly for 9 months within 3 months from now. The unlocking mechanism of Foresight Venture's strategic investment ensures fair distribution of tokens and provides long-term value to investors.

Project Description

LSDx is a super-liquidity protocol for all LSDs. It aims to optimize the financial value of Liquid Staking Derivatives (LSD) assets, solving their limited liquidity and lack of various financial scenarios that hinder their connection with various DeFi protocols. As the adoption of Proof of Stake (PoS) as a consensus mechanism expands in Ethereum and other layer1 networks, the demand for LSD assets is also increasing.

However, the current liquidity of LSD assets is relatively scarce, which limits their potential for broader financial applications. LSDx seeks to build protocols specifically for LSD assets, enabling them to unlock greater liquidity and a wider range of financial scenarios while providing higher underlying returns. By enhancing the value proposition of LSD assets, LSDx is committed to promoting the success of the LSD project and increasing its visibility in the crypto ecosystem.

At the same time, the Ethereum ecosystem has been facing challenges with risky assets, including concerns about third-party risk and inefficient swap mechanisms. LSDx aims to address these limitations by providing a super-liquidity protocol for all LSD assets, allowing users to fully benefit from the opportunities provided by collateral assets.

LSDx is an emerging liquidity protocol specifically for LSD assets. We can first learn more about the LSDx protocol through the Roadmap for the first half of 2023 announced in the white paper:

  • March 16, 2023 — Genesis Mining launches, the team will have the necessary infrastructure to support mining operations and will begin building the protocol’s cryptocurrency reserves.

  • March 23, 2023 - Genesis Mining will undergo its first halving, which means that the reward for mining blocks will also be reduced by half. This is a major event for the protocol's native token as it will affect the token's long-term value and scarcity.

  • March 31, 2023 - ETHx product launch: ETHx is a cryptocurrency investment tool that will allow investors to gain exposure to Ethereum without having to manage their own wallets. LSDx will market this product to institutional investors and high net worth individuals. (Due to some experience-related issues discovered after deployment, the launch has been postponed to Thursday, April 6, and the official website homepage is also counting down.)

  • April 30, 2023 - ETHx first yield adjustment: Adjust the yield of the ETHx product to reflect market conditions. Closely monitor the performance of the product and make adjustments when necessary to ensure that investors can obtain the best returns.

  • June 30, 2023 - UM product launch: UM is a stablecoin that provides price stability and reduces volatility in the cryptocurrency market. Its collateral mechanism and excess ETHx pledge guarantee its value and stability. Potential use cases for UM include payments, lending, liquidity provision, and structured products. As UM continues to develop and be adopted, it may become an important player in the stablecoin market.

LSDx Finance star product

  • Farm - Currently, LSDx Farm has five types of asset pools. Users can deposit ETH, stETH, frxETH, rETH and LSD/ETH UNI-V2-LP into the corresponding pools to earn the platform token $LSD. - The farm started a 14-day Genesis Mining event at 9 am (UTC) on March 16 to reward early supporters of LSDx. There are still attractive reward activities on Days 15-21 when the farm is online: 500,000 $LSD per day.

  • ETH pool: 75,000 $LSD /day

  • stETH pool: 262,500 $LSD /day

  • frxETH pool: 25,000 $LSD /day

  • rETH pool: 12,500 $LSD /day

  • LSD/ETH UNI-V2-LP pool: 125,000 $LSD /day -After ETHx went online (04/06), two new asset pools were added, with a daily output of 500,000 $LSD.

  • ETHx pool: 300,000 $LSD /day

  • LSD/ETH UNI-V2-LP pool: 200,000 $LSD /day

ETHx (launched on 04/06)

  • Introduction: ETHx is an asset basket portfolio containing various Ethereum-based LSDs, with built-in local LSD fast exchange. ETHx allows users to mint using ETH, stETH, fraxETH or rETH, providing users with flexibility and convenience. It aims to achieve the best ratio based on liquidity, security, interest and DAO participation.

  • Competitiveness: ETHx is designed for direct exchange without going through ETH first. This means that when users exchange their assets on LSDx, they can do so with lower slippage rates compared to Curve and Uniswap. This is because ETHx is a basket of ETH LSD tokens, providing a better ratio of constituent tokens, resulting in better liquidity and lower slippage rates. Ultimately, ETHx and LSDx provide users with an efficient and economical way to exchange assets without compromising security and efficiency.

  • Provide liquidity Mint ETHx: To provide liquidity to the platform, users can deposit any of the four assets (ETH/stETH/frxETH/rETH) into the ETHx pool contract. At the same time, the corresponding number of ETHx tokens is minted. The amount of ETHx minted is proportional to the amount of assets deposited and the current ratio of the three assets in the ETHx pool. Providing assets that are in short supply in the pool will be considered to help supplement the scarce liquidity of ETHx, thereby obtaining more ETHx rewards.

  • ETHx redemption: If the user wants to redeem ETHx, he can choose to redeem ETH/stETH/frxETH/rETH assets in proportion, or choose to redeem any unilateral asset. Redeeming a unilateral asset means that a transaction has occurred in the ETHx pool, and a 0.1% transaction fee will be charged.

  • LSD Swap function: In the future, the LSD Swap function will be opened, allowing users to trade ETH/stETH/frxETH/rETH with each other through ETHx. A 0.1% service fee will be charged for each transaction, and this fee will go into the LSDx fund library.

  • ETHx Earn function: This function allows users to stake ETHx to earn the platform token $LSD. Users can choose the staking period, and the longer the staking period, the higher the corresponding yield. In the first 30 days, ETHx Earn will provide 300,000 $LSD as a daily reward. Every 30 days thereafter, LSDx Finance will make a DAO reward adjustment decision on the ETHx reward pool to adjust the corresponding token inflation.

UM (Ultrasound Money) Ultrasound Stablecoin (launched on 06/30)

  • Introduction: UM is a stablecoin based on LSD, which is minted by over-collateralizing ETHx to ensure its value. UM aims to become a true super currency with multiple use cases:

    • UM’s price stability makes it an ideal medium of exchange, and its fast transaction speed makes it suitable for everyday payments.

    • UM can be used for lending purposes, and users can pledge UM to borrow other cryptocurrencies or stablecoins. Since UM is minted with over-collateralization, its stability reduces the risk for lenders, making it an attractive option for borrowers.

    • UM can be used as a liquidity provider in DeFi protocols. UM can be added to the liquidity pool to facilitate transactions in DeFi protocols, providing users with another liquidity supply option and obtaining additional benefits.

    • UM can also be used to create structured products such as Farm strategies or synthetic assets. These products can provide users with more complex investment options and are made possible by UM's price stability and collateral mechanisms.

  • - Minting: Users can mint UM by using ETHx as collateral for LSDx. The minting fee is 0%, and the minting rate can be up to 50%. This means that for every $2 of ETHx, a maximum of 1 UM can be minted. Excess ETHx is used as collateral to ensure the value of the UM stablecoin.

  • Liquidation: When the value of the user's ETHx goes down, until the collateral ratio reaches 110%, liquidation will be triggered! The liquidator will perform the process: the liquidator will first repay the debt, and the remaining amount will be returned to the minter. This process ensures that UM remains stable and maintains its value.

  • Withdraw collateral and burn UM: Users can burn UM to withdraw pledged ETHX, and the burning fee is 1%. The process is direct, and once UM is burned, the corresponding amount of ETHX will be returned to the user.

  • Rewards for holding UM: Holding UM will receive rewards from the collateral ETHx used to mint coins. All rewards are distributed in $LSD tokens. The specific reward model has not yet been explained.

Token Economics

LSD Token is the governance token of the platform and is used to vote on proposals and decisions related to the development and management of LSDx. The total supply of $LSD tokens is 1 billion, and the distribution map and specific contents are as follows:

  • 45% - Mining Pool: 450 million $LSD tokens will be allocated to the mining pool and the tokens will be released according to the mining contract. This is used to incentivize users to contribute to securing the network and gain more traction.

  • 20% - Reserve Treasury: 200 million $LSD tokens will be allocated to the Reserve Treasury and managed through the DAO. This portion will be used to fund future development and upgrades, as well as community initiatives and incentive grants.

  • 15% - Team: 150 million $LSD tokens will be allocated to the team, but there will be a one-year cliff release and a linear release over the next 3 years. This is used to incentivize the team to participate in the project long-term and ensure that they have a vested interest in the success of LSDx.

  • 10% - Marketing: 100 million $LSD tokens will be distributed to the market, with 10% initially unlocked and available for liquidity, and the remainder released linearly over the next year. This distribution will help ensure the health of the value of the $LSD token and market liquidity.

  • 10% - Community Building: 100 million $LSD tokens will be allocated for community building, which will be subject to a 6-month cliff release and a subsequent 2-year linear release. This allocation will be used to support the long-term financial stability of the platform.

  • Overall, the $LSD tokenomics aims to create a sustainable and balanced token economy for the LSDx platform, incentivizing all stakeholders to contribute to the growth and success of the platform.

$LSD tokens have been mined on the farm since March 17. Let's take a look at the market situation of $LSD tokens since: since March 17 at 19:00 at 0.1491/$LSD, and reached the highest price so far of $0.2389 within one day, the real-time token price on the date of writing this article is $0.0879, compared with the initial listing -40%. The total and maximum issuance of tokens are both 41,000,000, and the market value after full release is about 3 million US dollars. After listing, as farm activities mined a large number of $LSD tokens, and the consumption scenarios have not yet been completed, the number of $LSD tokens in circulation in the market began to increase greatly, and the coin price began to fall continuously, reaching the lowest price so far of $0.0401 on March 23, compared with the initial listing -73%. However, LSDx's featured product ETHx is about to be launched, which will be a milestone event for LSDx to truly step on the accelerator and break into the LSD market. As the launch date approaches, the 7-day $LSD investment return ratio has reached 25.89%, and the token price has fluctuated slightly higher, and it is possible to continue to wait and see the subsequent trend.

Conclusion

The official summary of the reasons why the well-known investment institution Foresight Ventures invested in LSDx Finance is as follows:

  • Timely positioning made it possible for LSDx Finance to execute a “vampire attack”;

  • GLP-like liquidity solutions solve the liquidity problem of LSD assets;

  • ETHx acts as a basket of $LSD tokens, balancing different LSD risks and benefits;

  • As a decentralized, interest-bearing stablecoin asset, UM has value to the entire crypto ecosystem.

  • And Foresight Ventures believes that the LSDx Finance protocol can inject new vitality into the LSD industry, and is optimistic that LSDx Finance can effectively gain market share in LSD asset liquidity.

The launch date of LSDx Finance's key product ETHx is April 6.

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