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The Ultimate Guide to LSD Fees
Liquid staking derivatives of ETH are the largest market sector in DeFi. In this post, we detail all the fees included so you're not losing money on your staked ETH.
LSDs are the BIGGEST sector in DeFi with $17B TVL. This quick and easy guide will guarantee you're not losing money on staking rewards.
Background
Liquid staking derivatives (LSDs) are derivative tokens that represent staked ETH. The breakthrough that LSDs achieve is that they unlock the liquidity of an asset that is otherwise capitally inefficient. This dashboard has all the details you could possibly want and more.
Shapella
The Shapella upgrade went live on mainnet roughly two months ago. The most important part about Shapella was the ability to withdraw ETH from the beacon chain which shipped in December 2020.
Since the implementation of Shapella the demand for staked ETH has skyrocketed. The waiting queue is nearly 50 days since only 2,000 validators can be added per day.
Yield for staked ETH is sitting below 5%, but will drop as more validators are added. Staking yield does include fees from MEV adding to the base earnings. You can increase this yield with DeFi, but that's a thread of its own.
Market Overview
Lido commands a dominant 74% market share despite the plethora of LSD protocols. This is a decentralization risk that needs more attention. The primary differentiator between each protocol is the fee charged to custody with them.
Top 10 LSDs
Fee Breakdown
Fees are outlined below; StakeHound was not included as it was hacked in 2021. It's shocking that Coinbase is so high, but the ease of use satisfies those afraid to venture on chain. It's surprising that @fraxfinance and @binance don't have a larger market share.
The LSD you choose will ultimately come down to fees and protocol trust. Fees will be a race to zero over time as users become more savvy. The real question is when does TradFi attempt to offer staking?
LSDfi is one of the top narratives in crypto right now.
Today we’ll be exploring @unsheth_xyz and how this protocol allows users to diversify their $ETH staking yield.
Let’s dive in. 🧵👇
— dLux (@dLuxGMI)
11:08 AM • May 25, 2023
Conclusion
LSDs are clearly a desirable product as everyone wants a piece of the $ETH yield. Note how much fees each protocol charges to save yourself some yield. Which protocols do you think eat the most into @LidoFinance market share over the next year?
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