Tapping Into the LSD Market in 2023: Liquidity and High Yield
As we all know, Proof-of-stake (POS) is a cryptocurrency consensus mechanism for processing transactions and creating new blocks (which we call mining) in a blockchain. Staking is a more environmentally friendly way to mine cryptocurrency while providing holders more benefits.
LSD, an abbreviation for Liquid Staking Derivatives, why can it become a hot sector in 2023?
⛑Problems With Ordinary Stakes
Ethereum is now a proof-of-stake (PoS) chain where you can stake your ETH for a comfortable and steady yield of around 4–6%. Sadly, staked tokens cannot be used elsewhere.
To break this status quo and incentivize more people to stake their tokens, LSD provides users with tokenized derivatives of staked tokens.
⚓Working Principle of LSD — Take SFT Protocol as an Example
Without the need to maintain the staking infrastructure, the LSD allows ordinary users to participate in staking and get rewards without thresholds. In addition, the design of LSD assets also releases the liquidity of the original tokens when they are staking, so a large number of users and assets are pouring into this new developed sector in a short period of time.
Taking SFT Protocol as an example, when you stake 1000 FIL, you will get 1000 SFT in a 1:1 ratio. You can use SFT to earn an APY yield between 10–41.53% in our farms, which is much more profitable than the 4–6% APY yield of the Ethereum POS chain mentioned above.
At the same time, SFT is not just an LSD product that you can use to earn FIL tokens on our farms, but it can also be traded with FIL and added liquidity combinations with other tokens on Pancake, etc.
🤔LSD or CEX?
In the LSD sector, projects such as Lido, Rocket Pool, Stkr (Ankr), Stakewise, StakeHound, Cream, SharedStake, Staked Finance, and Frax Finance are currently available for statistics.
People staked 4.65 million ETH tokens with Lido, accounting for 29% of the entire Beacon chain stake market share, surpassing the sum of all ETH staked with centralized exchanges.
In other words, when it comes to staking, the LSD protocol is more competitive than the convenient and fast CEX.
⭐Outlook
A competitive LSD protocol needs to implement:
1. High Yield
2. High liquidity
3. DeFi Integration
In terms of its business assets, LSD will grow into a sector with a market cap of $100 billion. The trading opportunities in the secondary market also need to be analyzed in combination with the token’s market value and application scenarios. It is also the reason why the SFT protocol chose FIL. If you are also a holder of FIL, you will understand what we are doing.
In addition, while the liquid staking sector is exploding, in the LSD-related derivative ecology, the DVT and Re-Staking sections that serve LSD protocol-related components will also have Alpha opportunities.
🛩SFT Protocol and LSD
While LSD is one of the core services the SFT protocol provides, underlying protocol services for storage and privacy computing, launching RPC nodes, AI and hardware GPU rendering are all among what the SFT protocol can provide.
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