With the arrival of ETH Shanghai upgrade, LSD currently has 19.2 billion US dollars pledged. What does the increasing growth prove?
A new revolution
If 2019 is the first year of DEFI, then this year will be a new beginning for DEFI. The emergence of LSD has brought more new ways of playing in finance, and such a market will inevitably be favored by capital.
In March, this figure was only 14.1 billion US dollars, and in less than a month, the amount of funds has rapidly increased to 19.2 billion US dollars, which is a crazy speed. However, this is not the end, but just the beginning. From the picture we can see that the current growth is still in a sideways state.
What is LSD?
Liquid Staking Derivatives (LSD)
Staking tokens is the process by which token holders lock their assets on-chain for a certain period of time to protect the network and receive rewards. However, traditional staking is not flexible enough and may prevent token holders from using their assets for other purposes. The role of liquid staking now is to solve other problems by allowing token holders to stake their assets while still being able to use the pledged assets as they wish. This can provide token holders with the benefits of staking rewards and network security without giving up control of their assets.
Simply put, liquidity staking is a way for token holders to earn rewards and support the network while still having the flexibility to use their assets.
What are Liquid Staking Derivatives (LSD)?
Liquid staking derivatives are a game changer for those who want to stake tokens but don’t want to be tied down. These derivatives represent the staked assets of token holders and confirm the staker’s participation in the staking pool. The exciting thing is that these tokens can be used for borrowing, trading, and collateral in the decentralized financial world. This means you can get the benefits of staking tokens without having to give up the right to use them. It’s a win-win situation that provides unprecedented flexibility and efficiency.
Derivatives may sound complicated, but they are actually a very common concept in finance. Let me explain it to you in simple terms. It is a contract between two entities that allows for the assessment of the future value of an underlying asset.
In the world of cryptocurrency, derivatives can be used to speculate on the future value of a cryptocurrency on a specific date in a contractual manner. This provides an opportunity for potential profit if the value of the cryptocurrency changes. Liquidity staking derivatives go a step further, allowing participants to enjoy the benefits of staking tokens while also being able to participate in derivatives trading.
Simply put, while you stake ETH to get rewards, you can also use the staked ETH to invest in DEFI and other activities to obtain higher returns.
Which LSD-related tokens are worth investing in now?
It’s the most critical moment again. After all, we have said so much. Many people may want to know which coins are LSD concepts and whether they can still be bought?
The most important thing is ETH. After all, LSD is based on ETH, so there is no problem in holding ETH at present.
The second is the most popular LDO. Currently, the LDO pledge has reached 12.7 billion US dollars, which is a terrifying proportion.
The rest are RPL (currently 1.4 billion US dollars pledged), FXS (currently 300 million US dollars pledged), ANKR, SSV and other currencies.
The specific pledge and growth can be seen from the figure below.
In such a rapidly growing market, mainstream currencies such as ARB and ETH will inevitably usher in a new spring. In addition, there is another small currency that you can pay attention to: QI (currently pledged 127 million US dollars, but the market value is only 4200 US dollars). As a project of the AVAX chain, the XAVA I mentioned a few days ago has already had a good increase, so will AVAX usher in a new spring?
