Multi-Ecosystem LSD Development Report: The Track is Grand, the Project is Early Stage

Last week, we released the LSDFi ecosystem report and a report on the impact of the Shanghai upgrade on LSD, but both 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, and observe the development trends of LSD in other ecosystems through data, as well as its impact on the LSD industry. The public chains surveyed include: BNB Chain, Cardano, Polygon, Solana, Polkadot, Avalanche, Cosmos, and Aptos.

BNB Chain

The current staking rate of BNB is 15.44%, with an average annualized yield of about 2.84%. Among them, the largest decentralized staking platform, Ankr, accounts for approximately 0.56% of the circulating volume.

The reasons for the slow development of LSD on the BNB Chain may include:

1. The yield rate of the native BNB DeFi protocol is relatively high.
2. BNB has multiple utilities on the Binance exchange, such as fee discounts, Launchpad, and other services.

The demand for LSD on the BNB Chain is much lower than that on Ethereum.

Cosmos

The staking rate of Cosmos Hub is about 61.96%, with an average staking yield of approximately 25.92%. The staking status of Cosmos has technical characteristics, with each application chain having its own validator network.

The Cosmos ecosystem currently has a small scale of LSD, with the total TVL of the leader Stride at only $15M. Luna had over $30 billion of LUNA staked across various protocols in March 2022, but the subsequent Luna-UST incident occurred.

The reasons for the slow development of Cosmos LSD may include:

1. High staking yield brings opportunity cost
2. Impact of Airdrop Policy
3. Liquidity risk of a 21-day unlocking period

However, factors such as Cosmos 2.0, the development of DeFi infrastructure, and governance functions may drive the development of Cosmos LSD.

Polygon

The staking rate of Polygon is 39.92%, and the average annualized return is 8.82%. Interestingly, Lido's APY on Polygon is the highest and is widely used in DeFi. This may allow Lido to dominate the Polygon LSD sector.

Solana

The staking rate of the Solana network is 70.75%, and the average annualized staking yield is 7.09%. Many early LSD projects have ceased operations, and new entrants like Stader may bring new developments.

Cardano

The current staking rate of Cardano is 68.73%, with an average annualized yield of 3.26%. Its unique technical architecture makes it difficult for LSD to develop within the ecosystem, as ADA staking is flexible and has no penalty mechanism.

Avalanche

The network staking rate of Avalanche is 62.05%, with an average annual return of 8.48%. LSD projects need to issue synthetic assets on the C chain to represent staking positions on the P chain, which presents technical difficulties. Currently, there are only two LSD projects, with Benqi's sAVAX dominating.

Avalanche's DeFi development is relatively good, but there are fewer LSD projects, which may be related to the multi-chain DeFi pattern in the ecosystem.

Polkadot

The staking rate of Polkadot is 47.05%, and the annualized staking yield is 15.29%. Its unique slot auction mechanism makes the crowdloan (Crowdloan) competitive with LSD in terms of yield. Lido has suspended Polkadot and KSM staking deposits since March 15, due to reasons including the underdeveloped DeFi ecosystem.

Aptos

The node staking volume of Aptos accounts for 82.5% of the supply, with miners averaging an annualized return of about 7%. Although there are multiple LSD projects, most have stopped updating. However, the number of holders of tAPT and stAPT is relatively high, reaching 45.2K and 29.9K respectively.

Summary

1. The multi-chain expansion of LSD business is an inevitable trend.
2. Many LSD projects have a poor user experience.
3. Centralized exchanges are a factor that cannot be ignored.
4. The sustainability of the LSD protocol in the new public chain ecosystem is worth paying attention to.
5. LSD has become an essential DeFi protocol for public chains.
6. LSD may become a new growth point for income in old DeFi
7. Collaborating with wallet providers is worth the attention of LSDFi projects.

LSD helps to improve network staking rates and security, and provides liquidity for DeFi. Node operators and centralized exchanges may be important influencers in the LSD battle. Overall, the LSD track has broad prospects, but most projects are still in the early stages.