LSD Ecological Development Trend Analysis: Patterns, Data, and Future Outlook

Most of the products predicted in the last released LSDFi Map have emerged, such as stablecoins supported by LST and governance disputes triggered by veToken, etc. However, there have also been some unexpected developments. This article will organize LSD-related projects, raise questions, and provide reflections.

First is the latest LSD MAP 2.0, as shown in the figure below. For detailed data and subjective evaluations, please refer to the personal compiled spreadsheet.

The LSD ecosystem has initially formed a structure. Divided by levels:

• L0: DVT service providers such as SSV Network and Obol Labs
• L1:Lido, Ankr, Coinbase and other LST issuers
• L2: Products based on LST design such as fixed income, stablecoins, and yield aggregation.
• L3: Further derivatives based on L2 products

Overall:

1. L0 technology barriers are the highest, but attention should be paid to the actual utility of the tokens.
2. L1 has already seen the emergence of leaders, and new projects find it difficult to shake the leading position.
3. Most L2 projects lack a moat, testing the team's execution ability.
4. The development space for L3 is enormous, but it is limited by the maturity of L2 products.

Data and Trends:

The ETH staking rate has steadily increased, surpassing 16% in June. It is expected to stabilize around 25% in the long term, due to reasons including:

• High distribution of ETH holdings
• The application scenarios of ETH are extensive.
• Demand for L2 ecological decentralized staking
• Compliance considerations restrict institutional staking

LSDFi will promote an increase in staking rates, but there are still no L2 projects capable of supporting a large amount of ETH, and there are still investment opportunities.

The share of decentralized staking platforms is less than 40%, CEX is about 20%, and the rest is node staking and Solo Staking. After the Shanghai upgrade, CEX withdraws the most principal.

In terms of yield, a two-layer nested model can basically increase the staking yield to over 10%. Projects with high sustainability often have low yields, mainly relying on token incentives.

The development of LSD on Layer 2 is rapid, with the highest number on Arbitrum. Layer 2 has low fees and fast speeds, making it a promising environment for L2 projects to develop.

User demands are diverse, including security, yield, and degree of decentralization. L1 leaders and L2 newcomers will fully grasp each factor to attract different users.

Overall, the LSD ecosystem is still in its early stages, and true prosperity may come alongside a bull market. The importance of project teams is highlighted, and cross-layer development may become a trend. Stakers should choose product construction strategies based on their risk preferences and be wary of risks.