Delphi Digital: Analysis of 5 types of LSDfi

Author: Delphi Digital, translation: Golden Finance xiaozou

LSD Finance (LSDfi) is a term for DeFi protocols related to LSD (liquid collateralized derivatives). These protocols include mature DeFi protocols such as Aave, Balancer, and Curve, as well as emerging protocols that help improve the utility of LSD and upcoming protocols.

LSDfi use cases can be grouped into the following five categories:

1. Interest rate swap

Interest rate swap protocols Flashstake and Pendle allow LSD holders to trade their own yields. Additionally, they can earn incentive rewards for providing liquidity.

2. CDP stable currency supported by LSD

Agility, Lybra Finance, and Raft are Collateralized Debt Position (CDP) stablecoin protocols that allow users to mint stablecoins using LSD as collateral. Lybra uses LSD earnings to create an interest-bearing stablecoin.

3. Diversified LSD

LSDx Finance, unshETH, Asymmetry Finance and Index Coop provide a variety of LSD products. In addition, protocols like LSDx and unshETH have launched swap functions, allowing users to earn additional swap fees.

4. Currency market

Aave and Silo Finance back LSD as loan collateral, bringing liquidity and leverage to LSD holders. Notably, Aave has been used for leveraged yield farming on stETH.

5、DEX

Before the Shapella upgrade, Curve Finance and Balancer supported ETH/LSD stable pools, allowing low-slippage swaps. Additionally, Gyroscope Protocol recently launched their Elliptic centralized liquidity pool, promising high capital efficiency for stablecoin trading pairs.

While the above categories may seem diverse, they all share a common goal: increasing returns for LSD holders.