Explore the new storyline LSDFi in DeFi

LSDFi is a natural extension of LSD, which integrates classic DEX and lending agreements, and also includes a variety of complex agreements to form a complete economic system.

**Written by: **Yugi AI

Compile: Kxp

LSDfi is the most exciting storyline in LSD and DeFi in general. If you want to know what it is and what items it contains, please don't miss this thread, let us unveil its mystery together.

1. LSD fi

LSDfi refers to a set of protocols based on LSD. It includes a range of projects, potentially ranging from classic DEX and lending protocols, to more complex protocols built using unique LST properties.

With the widespread adoption of LST, these protocols will play an important role in DeFi, laying the foundation for the DeFi ecosystem; while projects building more complex products on top of LSD will be in the next layer.

LSD has become the dominant category in Total Value Locked TVL, with Lido being one of the largest projects. Therefore, LSD plays a key role in driving the growth of the entire DeFi ecosystem.

The integration of DeFi and the LSD industry is an important trend, and LSDfi is the result of this evolution. As this trend develops, LSD is becoming one of the major forces in DeFi. At present, LSDfi has developed into an independent field in DeFi and is making positive progress. It not only includes classic DeFi protocols, but also covers more complex protocols such as Baskets Protocol, Stablecoins, Yield Strategies, and more.

2. DeFi Classic

LSD has long been an important part of classic DeFi. Many LSTs can be used as collateral and traded on decentralized exchanges.

Classic LST DeFi examples include:

• $stETH in Aave as collateral

• Liquidity pools in Curve Finance

• treasury in yearn

As LSD grows in popularity, we can foresee the emergence of decentralized exchanges or aggregators that will be tailored for LSD. For example, LSD-focused protocols include LSDx Finance (similar to Curve), and Cat-in-a-Box Finance, which is a lending protocol.

3. LSD Basket

There are currently many liquid staking solutions for ETH, so in theory, there should be a protocol that can combine them into a basket and create a corresponding index. This approach allows for risk diversification and makes LSD-related investments more convenient.

LSE Basket Agreement:

• Index Coop launched two index LSDs, dsETH and icETH. dsETH includes the top Ethereum LST, while icETH utilizes leverage.

• unshETH launched unshETH Basket containing top Ethereum LSTs.

• Asymmetry Finance supports depositing ETH and getting safETH backed by the top three LSTs.

4. Revenue Strategy

LSD is a Token that can continuously generate income. Naturally, you can develop a strategy around it. For example, assigning it to different pools, using it as collateral, utilizing leverage, and managing staking rewards.

Yield Strategy Agreement:

• 0xAcid lets you invest ETH in a diversified basket of raw LST and various strategies.

•Parallax Finance is a leveraged LSD income strategy platform designed to integrate multiple LSTs.

Another method is Pendle, which offers a unique approach: since this is a platform for buying futures, you can buy ETH at a discount and receive it later, while it will be invested in designated LST.

Asymmetric benefits:

• asymetrix.eth is a protocol for asymmetric yield distribution through staking, inspired by Premium Bonds with a similar mechanism. It is similar to a lottery where a few winners share in all staking rewards for a period of time.

5. Stablecoins

Using LSD for an overcollateralized stablecoin is a very logical choice. LSD will continue to generate income from staking, giving the stablecoin its income characteristics. In this case, everything is still backed by ETH.

Stablecoins supported by LSD:

• eUSD by Lybra Finance

• aUSD by Agility

• R by Raft

6. Concluding Thoughts

LSD has become the standard in the PoS ecosystem and has become one of the major trends in DeFi. LSD can generate stable, low-risk passive income and help maintain the stability of the blockchain. LSDfi is a logical extension of LSD, creating an entire economy that can generate substantial income on the one hand, and simplify interaction with LSD projects on the other.

LSDfi will continue to develop and gradually witness the increase in complexity and uniqueness of the project, let us look forward to its development in the future.