From the inception of decentralized finance (DeFi) into the crypto space, but has been unable to address critical issues. This is where LSDfi comes in, constituting a set of protocols based on Liquidity Staking Derivatives, covering different aspects of the DeFi ecosystem.
LSDfi gives crypto enthusiasts enhanced flexibility and capital efficiency, bringing liquidity sensitivity with derivative farming. But what are some of the prominent LSDfi projects in the crypto space? We delve into the top LSDfi projects to watch.
What is LSDfi?
LSDfi encompasses a set of protocols based on liquid staking derivatives (LSD), constituting different aspects of the DeFi ecosystem. Such protocols may include classic deFi components like decentralized exchanges (DEXs) and lending platforms, as well as more complex projects that take advantage of the unique properties of LSD.
LSD plays a crucial role in enforcing the growth of the whole DeFi ecosystem. Additionally, LSDfi is a logical extension of LSD, paving the way for generating substantial income while simplifying interactions with LSd projects.
The liquid staking projects offer a firm foundation for LSDfi within DeFi.
Top LSDfi Projects to Watch
LSDfi increases the utility and the opening up of yield opportunities to LSD token holders. Here are some of the projects to look forward to.
1. Lybra Finance
LBR, as an LSDfi project, acts as an interest-bearing stablecoin protocol, which allows users to deposit ETH or Lido Staked ETH (stETH) as collateral, against which they can borrow Lybra’s stablecoin, eUSD. They can be able to borrow with up to a collateral ratio of 170%.
To top it, Lybra Finance allows one as a holder to receive stablecoin $eUsD automatically bearing 7.2% interest. As long as you hold it, you get a stablecoin and, in turn, multiply.
Apart from earning by holding, holders can also earn through liquidity in eUSD pools and engage in ETH-levered long strategies by buying more ETH with eUSD.
This project is worth watching, as it has been one of the best performers in the LSDfi sector.
2. Gravita Protocol
Gravita Finance is an interest-free lending arrangement with LST as collateral, much like the LSDfi version of the Liquidity Protocol. After collateralizing ETH in LSD protocol to receive rETH, wstETH, and other LST, you then deposit it in Gravita. In return, you can get stablecoin GRAI.
The GRAI is a stablecoin that can be loaned through Gravita for consumption or deposited into the stablecoin fund to purchase liquidated LST collateral at a discounted price.
As a user, if your loan is repaid within six months, the interest is then prorated, and the minimum interest is only equivalent to one week’s interest.
As an assurance that the protocol manages the risk posed by the high LTV ratio, Gravita operates with a stability pool that ensures the GRAI is always backed by sufficient collateral.
3. Raft
Raft is currently one of the leading protocols in the emerging LSDfi market segment. Every project under this segment has a different way of how they go about earning extra yield. For instance, Raft offers $R, which is a decentralized stablecoin pegged to the USD and backed by stETH.
Raft has seen exponential TVL growth in recent months, even when they did not have their own token. The team continues working on a RAFT token, which may further decentralize their ecosystem. Additionally, it will raise demand to mint more $R.
When you mint $R, you can start using it. It gives a minimum collateral of 120% of stETH. The payment comes at a time that suits you, as such, there is no limit.
4. Maverick
With the Maverick protocol, there is a new framework for decentralized finance. The protocol operates to create a highly fluid market that benefits traders, liquidity providers, DAO treasuries, and developers.
Maverick protocol operates with an Automated market Maker (AMM) at its core.
Additionally, Maverick allows you to contribute liquidity using your LSD/LST tokens and reap the rewards derived from its associated fees.
With its optimistic outlook, the protocol aims to make itself a top decentralized exchange for LSTs.
In addition, Maverick tries to address the challenges faced by liquidity providers (LPs) on Uniswap V3, including position management, the lack of directions for LPs, and low capital efficiency.
5. Index Coop
Index Coop is a protocol run by a decentralized autonomous organization (DAO), offering users organized DeFi goods and important tokens. For eth holders, Index Group gives way for two index tokens, dsETH and icETH, which streamlines the process of earning rewards.
Most LSD and LST protocols operate on the Ethereum mainnet, making it expensive to deposit into various LSD platforms. However, Index Coop comes as a solution, offering a solution by consolidating popular LSTs into a unified ERC20 token, dsETH.
Conclusion
The LSDfi space goes on to evolve, giving rise to more intricate and distinct ventures. We see so many interesting things, and it is exciting to witness the developments that lie ahead in this realm.
The DeFi ecosystem continues to expand, and the expanding significance of LSDfi underscores the growing demand for sophisticated yield farming opportunities. LSDfi may bring in some newcomers and DeFi enthusiasts looking for ways to optimize their investments and achieve higher returns.