Multi-Ecosystem LSD Development Report: Grand Track, Early Stage Projects

Last week, we released the LSDFi ecosystem and LSDFi War report, as well as a report on the impact of the Shanghai upgrade on LSD, but primarily focused on Ethereum. This is because the amount of funds brought in by Ethereum's liquid staking alone exceeds $14 billion. This report will explore the development and gameplay of LSD in other public chain ecosystems, observe the development trends of other ecosystem LSDs from data, as well as the impact on the LSD industry, and discuss LSD product design and fairness. The public chains investigated include: BNB Chain, Cardano, Polygon, Solana, Polkadot, Avalanche, Cosmos, Aptos( based on the top 25 public chains by market cap on Coingecko).

BNB Chain

The current staking rate for BNB is 15.44%, which is close to Ethereum, with an average annualized return of about 2.84%, which is relatively low. The largest decentralized staking platform, Ankr, accounts for about 0.56% of the circulation.

Reasons for the slow development of BNB Chain LSD:

1. The yield of the native BNB DeFi protocol is high, with over 80% of trading pairs exceeding staking yields.

2. BNB Utility:

• As the platform token of Binance exchange, holding it can earn fee discounts and other services.
• Services like Binance Launchpad attract users to hold BNB

For trading holders, obtaining fee discounts on Binance or participating in DEX's DeFi products offers higher returns and stability than LSD. The LSD potential of BNB Chain is much smaller than that of Ethereum.

Cosmos

The staking rate of Cosmos Hub is approximately 61.96%, with an average staking yield of about 25.92%. Unstaking requires a waiting period of 21 days. The staking status of Cosmos has technical characteristics, as ATOM serves only as the token for Cosmos Hub, and application chains within the ecosystem may not use ATOM. Therefore, when statistics are gathered, it is necessary to consider the LSD protocols on the ATOM chain and the ecological IBC chains.

Reasons for the small scale of Cosmos LSD:

1. There are many L1-like chains within the ecosystem, but they cannot yet break out of Cosmos.
2. High staking yields bring opportunity costs, participating in DeFi is not as good as staking directly.
3. Airdrop: LSD staking may not be eligible for ecosystem project airdrops.
4. Liquidity Risk: LSD unlocking requires 21 days

But Cosmos LSD still has great prospects:

1. Cosmos 2.0 will enhance the value and composability of ATOM.
2. The DeFi infrastructure is gradually improving.
3. LSD can provide governance functions such as proxy voting.
4. Can solve the 21-day unlocking time issue, improving fund efficiency.
5. External factors such as the development of Ethereum LSD will indirectly promote Cosmos LSD.
6. Cosmos is preparing to launch a liquid staking model.

Polygon

The staking rate of Polygon is 39.92%, with an average annualized return of 8.82%. 12% of MATIC is used as staking rewards.

Interestingly, Lido has the highest APY on Polygon and occupies an important position among major DeFi protocols. This may allow Lido to dominate the Polygon LSD space.

Solana

The Solana network has a staking rate of 70.75%, an average annual staking yield of 7.19%, and has 3165 validators.

Multiple LSD projects such as aSOL, Eversol, Socean, etc. have seen a significant decline in TVL since May 2022, and their Twitter accounts have been deactivated. New entrants led by Stader may bring new developments to Solana LSD.

Cardano

Cardano staking rate is 68.73%, with an average annualized yield of 3.26%. Its special technical architecture makes it difficult for LSD to develop in the ecosystem:

• Assets are not locked during the staking period and can be used freely.
• No confiscation mechanism
• Users can directly become liquidity pool operators with a relatively low threshold.

Avalanche

The staking rate of the Avalanche network is 62.05%, with an average annual yield of 8.48%. The technical architecture is divided into C-chain, P-chain, and X-chain.

LSD projects need to issue synthetic assets corresponding to AVAX on the C chain, which presents technical challenges. Currently, only two LSD projects have been found, with Benqi's sAVAX being the dominant one.

Avalanche DeFi has developed well, but most projects are migrated from external sources. This pattern may also affect the development of LSD, as new native LSD projects face competition and difficulties in resource collaboration.

Polkadot

Polkadot staking rate is 47.05%, annualized return is 15.29%, locked for 28 days. Its features include slot auctions and a crowd lending mechanism, resulting in insufficient attractiveness of LSD, with DeFi largely built around crowd lending.

Lido has suspended Polkadot staking as of March 15, citing reasons including the underdeveloped DeFi ecosystem limiting LSD applications, as well as some market and operational issues.

Aptos

The staking volume of Aptos nodes accounts for 82.5% of the supply, with an average annual yield of about 7%. Although multiple LSD projects have been discovered, most have stopped updating. The Aptos DeFi TVL is only 37M, and there are even fewer basic protocols for LSD.

However, the number of tAPT and stAPT holders reached 45.2K and 29.9K respectively, far exceeding other LSDs of similar scale in the ecosystem. The future launch of the Sui mainnet may promote the development of the Move ecosystem DeFi, creating more opportunities for LSD.

Summary

1. The multi-chain development of LSD business is an inevitable trend, but it starts mainly from a single chain.
2. Many LSD projects have poor UI and UX experiences.
3. Centralized exchanges are an important factor that cannot be ignored.
4. The LSD protocol in the new public chain ecosystem carries risks and requires careful selection.
5. LSD has become an essential DeFi protocol for public chains
6. LSD may become a new growth point for integrated DeFi.
7. The wallet end may become an important partner for LSD projects.

Discussion

1. LSD is backed by ETH, the second largest currency in the crypto world, with a huge market space.
2. LSD from other chains helps improve network security and promote DeFi development.
3. Node operators and centralized exchanges may be the biggest influencers in the LSD wars.
4. Non-PoS network native assets may also design LSD, such as those developed based on governance rights.