The LSD track, which was very popular two or three months ago, is rarely mentioned now, and the industry's attention has gone to BRC-20, but we can never say that the LSD track is cold, it is still relatively clear A track that will inevitably explode in the next round of bull market (another track that is also very clear that it will explode is ZK).
For those who bet on the industry, there is an essential difference between the two tracks in terms of inevitability.
There is no clear technical path for the ZK track. We don’t know what paradigm ZK will be applied to the blockchain in the future. Now various solutions are being proposed and iterated, and only time will know the answer.
But the LSD track is different. At least you can refer to the market ecology and logic of various mature POS public chains at least, and you can directly refer to the very mature traditional fixed income market at a large scale.
Most of the following opinions are based on listening to the webinar "LSD, 100 Billion Liquidity Reservoir?" sponsored by WEB3 Scenario Lab a month ago. ——A detailed explanation of the LSD ecology, track, and opportunity, you can understand it as an after-listening review, and a link to the replay of the meeting is attached at the end of the article.
1. The LSD track is bound to explode
The reason why I dare to assert so clearly is that the most basic judgment is because the pledge rate of known POS public chains is generally 50%-80%, while the pledge rate of Ethereum at the moment is 14.92%.
Even if you are pessimistic about Ethereum, there is no reason not to believe that the pledge rate of Ethereum still has a lot of room to rise, so the price of Ethereum will inevitably rise.
Of course, in the current macro cycle, there will be no incremental funds entering the market in a short period of time, but will continue to be lost as interest rates rise, which will offset the increase brought about by the increase in the pledge rate, and there is even a lot of room for decline... …
2. The most obvious opportunity for the LSD track is the staking protocol
The annualized staking of Ethereum is basically around 5%, which is very attractive for long-term holders.
However, there are many types of long-term holders. Institutions, giant whales, retail investors, project treasury, etc. are in different ecological niches, and their volume and cash flow are different, which determines that they will choose different ways to staking .
Institutions and giant whales prefer to build their own nodes. Although it is troublesome, it is safe enough.
Lido is currently the best choice for retail investors. Not only can ETH below 32 participate, but there will also be mapped stETH, which releases the Liquidity of ETH that was originally locked. Pledge".
In fact, there are long-term holders between the two, that is, those who have money but are too lazy to build their own nodes, and Ebunker is targeting this market segment, and it has a reason that large customers cannot refuse- Non-custodial. In other words, customers still have 100% control over their own ETH, and Ebunker only provides node, operation and maintenance and hosting services.
3. The real opportunity lies in DeFi
Now the DeFi protocol on Ethereum is generally based on ETH, but attracted by the 5% yield, more and more people will participate in staking.
Therefore, it is not difficult to predict that there will be various types of stETH in circulation in the future, and they will become the mainstream assets of the Ethereum DeFi ecosystem, and will also spawn many re-pledging agreements. It is not even difficult to predict that there will be "stETH wars like the curve war" ".
Of course, the above are still very rudimentary financial methods. You can understand them as enterprises founded by township entrepreneurs in the 1980s with instinct. We must believe that the mature financial methods of the outside world will definitely accelerate the evolution of the DeFi ecosystem.
So what financial games will emerge? This is a very professional and grand topic (I feel like I have dug a hole for myself), but since ETH actually plays the role of the U.S. debt of the Ethereum ecosystem, we can find some insights from the development of the traditional fixed income market. clue.
1. It will create a wave of rich issuers and underwriters
There will be fierce competition between various stETH and stETH-based re-pledged tokens, and there will definitely be a new wave of tokens that promise ultra-high returns like Luna, and will really attract money in a short period of time.
The ultra-high returns are either based on leverage or air coins. In short, the bubble will eventually burst. Although this is a very simple market principle, it does not prevent the emergence of a new wave of re-pledging agreement issuers when the next bull market comes. .
The role of the underwriter in the DeFi world is taken over by those who specialize in AirDrop, new KOLs and the media.
2. There will be more complex segmentation and combination
In fact, the traditional fixed income market already has a large number of dazzling ready-made methods for reference. In short, it is to combine assets with different periods, face values, risks, and types in a kaleidoscope style before selling them.
Although this method eventually led to a financial crisis...but it released Liquidity after all, no matter how much people hate it, it will not stop its development. What's more, the transparency of the DeFi world is higher, at most it is the next Luna, and the risks are generally controllable (landslides, not tsunamis).
3. The DeFi market will undergo structural changes
The maturity of various stETH and stETH-based re-pledged tokens will lead to the acceptance of fixed income in the entire DeFi market.
At this stage, DeFi is mainly based on transactions, while fixed-income products that occupy a considerable share in the traditional financial market account for a small proportion.
In fact, the bottleneck is not the users. Users have fully demonstrated their strong interest in stable income on GMX, but the project party has not yet changed over.
Therefore, the current financing channels are still mainly based on the sale of security tokens, and the bond market has basically not been developed. Although Solv Protocol was engaged in the bond market during the last round of bull market, there was little response. The next round of this kind of bond issuance and trading platform for project parties has great opportunities.
In addition, there will be more complex gameplays - to achieve relatively fixed income products through hedging means. This has not been widely adopted yet. Only some protocols that can hedge stToken are distributed on the POS public chain. More complex hedging products will be opportunities for the next round of bull market.
As for when the next bull market will come? Our next article will be devoted to analysis~
