The LSDFi battle begins with various gameplay competing in the ETH staking market.

LSDFi is a DeFi product based on LSD. Through LSD, stakers can convert their staked ETH into tradable assets, unlocking liquidity while dropping the staking threshold. Behind LSDFi is DeFi Lego, where new entrants attract users to stake ETH/LSD through incentives, competing for market share and control of LSD. Some projects utilize dynamic incentives to promote the decentralization of validators.

The following are the five main forms of LSDFi:

1. LP ( yield 10% + )

LSD-ETH liquidity pool can earn staking rewards and LP fees. After the Shanghai upgrade, LP scale may increase.

2. Circular lending ( yield 10%+)

Obtain leveraged returns by repeatedly staking, borrowing ETH and LSD, but the liquidation risk is relatively high.

3. Yield (10%+)

Aggregate multi-platform yields and subsidies to increase APY, such as Yearn Finance.

4. EigenLayer ( earnings unknown )

Provide multiple staking methods, including LSD restaking and LP staking.

5. Incentive LSDFi Projects

Improve capital efficiency through leverage, derivatives, etc., or attract funds with high APY. Major projects include:

• Pendle: provides staking services and liquidity pools for ETH and others, with an APY of up to 95%.

• Ion Protocol: Tokenizes LSD into allETH and vaETH, planning to collaborate with multiple DeFi protocols.

• unshETH: Promotes the decentralization of validators through dynamic reward allocation, supporting various LSD.

• LSDx Finance: Aims to become the main DEX for LSD assets, using a unified liquidity pool ETHx.

• Liquid Staking Derivatives: LSD aggregator, maximizing asset leverage through tokenization and derivatives.

• Stader Ethereum: ETHx is coming soon, planning to collaborate with 30+ DeFi protocols.

• Hord: Achieve a high APR through staking, MEV rewards, and token subsidies.

• Parallax Finance: Provides liquidity and leveraged lending services on L2.

• bestLSD: Real Yield aggregator, utilizing yield to subsidize its own LSD.

• 0xAcid DAO: A management protocol for maximizing returns on LSD assets.

• Index Coop: Issues two LSDFi related index products, dsETH and icETH.

• Gitcoin: In collaboration with Index Coop, launched gtcETH, with part of the proceeds used for public goods donations.

Overall, the LSDFi project is vying for the discourse power of LSD, and high returns may last for a while. There is room for collaboration among projects, and products with different risk-return levels may be formed in the future. The LSD War has already begun and may continue until the Ethereum staking rate stabilizes above 25%.