Bull Market Engine: Can LSD lead an epic bull market? How should ordinary investors participate? What innovative projects are worth paying attention to?

七月QY · 2023-04-28T07:23:03.000Z

The May Day holiday starts tomorrow, and the main players in Asia should go out for sightseeing again. The currency circle will go through an embarrassing period of tight liquidity. During this period, it is estimated that it will be difficult to have a big market. In terms of trends, As long as the 27,000 line can be stabilized, it will be a victory for the bulls. The market has been relatively fragile these days, but the popularity of BRC-20 has stimulated another wave of popularity. Just play Go, and the bulls can breathe another sigh of relief. However, this track is still in its early stages, and is still within the scope of scientists in the currency circle. For example, mint on BTC still has a certain technical threshold. It is not easy for ordinary novices to get started. In this way, they can only watch the excitement. If the market It is relatively trouble-free and simple to buy some leading varieties such as ordi.

The May Day holiday will start tomorrow, and the main players in Asia will go out to travel again. The cryptocurrency circle will experience an awkward period of tight liquidity. It is estimated that it will be difficult to have a big market during this period. As for the trend, as long as the 27,000 line can be stabilized, it will be a victory for the bulls.
The market has been relatively fragile these days, but the popularity of BRC-20 has boosted a wave of popularity. Just play a game of Go, and the bulls are relieved. However, this track is still in its early stages and is still the battle range of scientists in the currency circle. For example, minting on BTC still has a certain technical threshold, and it is not easy for ordinary novices to get started. In this case, they can only watch the fun. If they can get some leading varieties such as ordi off-site, it is still a relatively easy and simple way.
Judging from the current market situation, I estimate that in the next six months or even longer, the market focus will always be on two points. In addition to BRC-20, there is the Ethereum upgrade, and narrowing the scope, there is LSD. We have talked a lot about this field. This is also an epic market node, and everyone must pay enough attention to it.
As of now, the pledge ratio of Ethereum is only 14.87%, while the average pledge rate of mainstream public chains is about 50%, and there is at least three times of room for growth. Currently, liquidity pledge derivatives account for about 33%. Assuming that the Ethereum pledge rate reaches 45% in the next three years, about 15% of ETH will eventually be converted into LSD. According to Ethereum’s current market value of US$230 billion, approximately US$34.5 billion in assets will be expressed through LSD. Together with various LP certificate assets, the scale of LSD and related assets will exceed US$50 billion. If these assets can be magnified through reasonable leverage, it will generate more than US$100 billion in liquidity.
Since the collapse of the bull market, the crypto market has been in a long-term bear market. Against the backdrop of the US dollar interest rate hike, the low liquidity in the currency circle has been tightening again and again. The entire DeFi market needs a new narrative to rekindle capital's enthusiasm for DeFi, and LSD assets and LSDFi applications have become an important part of the Ethereum ecosystem. In the entire crypto market, LSD is the only asset that can have stable returns and abundant ETH liquidity. Through LSD, users can convert pledged ETH into liquid assets and participate in liquidity mining and other operations to obtain more income. LSD will become a new narrative to bring rich composability to the crypto market.
In other words, as long as the Federal Reserve stops raising interest rates, a large amount of liquidity will quickly enter the cryptocurrency circle through LSD, thus forming a new leverage and triggering a new bull market.
So, how should we plan to seize the possible LSD Summer?
There are several roles: For the protocol layer and entrepreneurs, they can integrate LSD assets into the protocol, guide the scale of LSD assets through incentives, and occupy market share. For entrepreneurs, they can build a nesting protocol for LSD assets, maximize the leverage of LSD assets, and further improve the capital efficiency of LSD. Or they can integrate to build a more efficient and decentralized staking infrastructure.
For users, they can participate in POS staking, earn stable returns from Ethereum staking, and release asset leverage through LSD vouchers to obtain more returns. They can also discover and participate in new LSD-based DeFi protocols to earn early Alpha returns. In addition, they should also pay attention to the innovation of the LSD ecosystem.
At present, the following innovative projects can be paid attention to:
1. EigenLayer. It is an Ethereum re-staking protocol that allows stakers to re-stake their ETH into new smart contracts and use ETH to protect the security of other networks, such as maintaining the security of side chains, cross-chain bridges, and middleware.
In addition to increasing the source of income for ETH stakers, in a broad sense, EigenLayer can encourage more developers to build side chains, cross-chain bridges and middleware based on Ethereum re-staking, thereby promoting the further development of the Ethereum ecosystem. Currently, EigenLayer has been launched on the non-incentivized test network. Interested friends can check the guide for interaction.
2. unshETH. It is an LSDFi protocol that promotes the decentralization of Ethereum staking verification through liquidity incentives. unshETH introduces two concepts, namely, validator decentralized mining vdMining and validator dominance options (VDOs). The construction of vdMining and VDOs is to promote CR (current ratio) to approach ODR (optimal decentralization ratio) through different modes.
3. Lybra (laibo) is an over-collateralized stablecoin protocol. In addition to conventional over-collateralization, liquidation, and arbitrage, unlike MakerDAO and Liquity, Lybra mints interest-bearing stablecoin eUSD by mortgaging interest-bearing assets stETH. Lybra converts the interest stETH generated by stETH into eUSD and distributes it to eUSD Holders and Lybra Token pledgers.
In essence, Lybra captures the returns of Ethereum staking through the stablecoin eUSD. The security staking rate of eUSD is 160%, and the APY is 7.2%. If calculated under the most ideal conditions (1.6 USD of stETH mints 1 USD of eUSD), the profit efficiency of eUSD is slightly less than that of stETH.
However, eUSD is a liquid asset, and holders can earn more profits in DeFi protocols through eUSD, thereby providing higher capital efficiency for the Lybra protocol’s stakers. From another perspective, Lybra is actually helping Ethereum stakers to cash in future interest in advance.
Of course, these agreements, initial investments, risks and returns are all equally large, which means that we cannot put all our eggs in one basket, and adhering to the principle of investing spare money is the safe way to make a profit.