What is LSTfi?
What is LSTfi?
LSTfi is a new set of DeFi (Decentralized Finance) Protocol built on top of the Liquid Staking Tokens (LSTs). LSTfi has emerged as a result of the Liquid Staking market's growing popularity among crypto investors. LSTs offer a solid foundation of liquidity upon which new LSTfi products can be built. LSTs are rapidly replacing other types of collateral in Ethereum DeFi as a result.
As of now, over 50 LSTfi protocols, including new Collateralized Debt Positions (CDPs), indexes, and lending and borrowing markets have been released.
The overall TVL of all Liquid Staking Tokens on Ethereum has surpassed the combined TVL of Decentralised Exchanges and achieved a market valuation of over $18+ billion, earning LSTs the top-ranking category in DeFi. Thus it becomes even more clear that the LSTfi is contributing heavily to expanding the reach of DeFi and the future does look promising for LSTfi protocols.
Before moving any further it is worth mentioning that the terms Liquid Staking Tokens (LSTs) and Liquid Staking Derivatives (LSDs) mean the same thing. Initially, it had always been Named as LSDs until a few months ago when people started to advocate for a shift to LSTs to avoid the use of "Derivatives" and its possible regulatory uncertainty.
With LSTs/LSDs, we can unlock the staked tokens that stakers hold and enable them to be traded and used as collateral in DeFi protocols.
Therefore, the term LST and LSD have the same meaning and can be used interchangeably.
For the year 2023 with a combined TVL of $18 Billion of all LSTs on just Ethereum, LSTs have been the top gainers in the DeFi category. Liquid Staking provides a lot more flexibility for investors with what they can do with their staked tokens. They no longer have to choose between staking their assets or participating in DeFi, they can instead gain the benefits of both which makes LSTfi a very natural option for investors to invest upon.
On a successful Shapellaupgrade in April of the Ethereum network, investors have shown more faith in ETH staking. Shapella upgrade allowed investors the freedom to unstake their ETH tokens at their own comfort. Since then we’ve seen a growth in the net inflow of staked Ethereum leaving a positive impact on the LSTfi protocols.
Therefore the surge of LSTfi has left a positive impact on the crypto market as a whole and we can still expect a lot more from it.
Even though the LSTfi market is still at a very early stage to decide if it will stay for a long time or not, LSTfi has seen tremendous growth this year and is very much ready to continue its growth trajectory in the coming months.
While considering only Ethereum, the LSTfi market cap is just a fraction of the Ethereum Liquid Staking market cap, which makes it clear that there are still a lot more opportunities for LSTfi protocols to grow and create a good market for themselves.
If LSTfi protocols successfully create and present more attractive and innovative solutions to users. The LSTfi user base will automatically grow by which they can create a market of themselves and make LSTfi a great investment option.
Q) Is it safe to buy LSTs?
Ans) There are a few things to consider before deciding whether or not to buy LSTFI.
Ultimately, the decision of whether or not to buy LST is a personal one. However, it is important to carefully consider the risks involved before making a decision.
Q) What factors influence the price of LST?
Ans) The price of LST is influenced by a number of factors, including:
The price of LST can also be influenced by other factors, such as news events, regulatory changes, and technical developments.
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