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

Last week, we released the LSDFi ecological report and the report on the impact of the Shanghai upgrade on LSD, focusing mainly on Ethereum. This report will explore the development and gameplay of LSD in other public chain ecosystems, observe the development trends of LSD from a data perspective, and discuss the impact on the LSD industry and product design. The public chains surveyed this time 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 return of about 2.84%. The largest decentralized staking platform, Ankr, accounts for 0.56% of the circulating volume. The development of LSD on BNB Chain is slow, mainly due to the following reasons:

1. The yield of the native DeFi protocol of BNB is relatively high.
2. BNB has additional utility on the Binance exchange.
3. Services like Binance Launchpad attract users to hold BNB

For trading holders, obtaining fee discounts on Binance or participating in DeFi products yield higher returns and stability than LSD. The potential demand for LSD on the BNB Chain is far lower than on Ethereum.

Cosmos

The staking rate of Cosmos Hub is approximately 61.96%, with an average staking yield of about 25.92%. The LSD scale of Cosmos is relatively small, with the largest total TVL of Stride being only 15M USD. The main reasons are:

1. The Cosmos ecosystem is relatively decentralized, and the DeFi development of each chain is limited.
2. High staking returns bring opportunity costs
3. Airdrop policy is unfavorable to LSD participants.
4. The 21-day unlocking period brings liquidity risks.

But Cosmos LSD still has development prospects:

1. Cosmos 2.0 will enhance the value of ATOM
2. The DeFi infrastructure is gradually improving.
3. Governance features can enhance the appeal of LSD
4. Can solve the 21-day lock-up period issue
5. The development of Ethereum LSD will drive overall attention.
6. Cosmos official plans to launch a liquidity staking model

Polygon

The staking rate of Polygon is 39.92%, and the average annualized return is 8.82%. Lido has the highest APY on Polygon, and the liquidity of stMatic is quite good, which may lead to a monopoly situation in the LSD field.

Solana

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

Cardano

The current staking rate of Cardano is 68.73%, with an average annualized return of 3.26%. Due to its unique technical architecture, LSD is difficult to develop within the Cardano ecosystem. ADA staking is flexible and has no penalty mechanism, allowing users to participate in staking directly.

Avalanche

The network staking rate of Avalanche is 62.05%, with an average annual yield of 8.48%. LSD projects need to connect P-chain and C-chain, which presents technical difficulties. Currently, there are only two LSD projects, with Benqi's sAVAX dominating the market. Avalanche's DeFi is developing well, but the competitive landscape of native projects and cross-chain projects may restrict the growth of LSD.

Polkadot

The staking rate of Polkadot is 47.05%, and the annualized staking yield is 15.29%. Due to the existence of the lending mechanism, LSD lacks attractiveness in terms of yield. Lido has suspended its Polkadot staking services for reasons including the underdeveloped DeFi ecosystem.

Aptos

The staking amount of Aptos nodes accounts for 82.5% of the supply, with miners averaging an annualized return of about 7%. Multiple LSD projects have ceased operations, but the number of tAPT and stAPT holders is relatively high. The launch of the Sui mainnet may promote the development of Move ecosystem DeFi, creating more use cases for LSD.

Summary

1. The multi-chain nature of LSD business is an inevitable trend.
2. Most LSD projects have poor UI/UX experience.
3. Centralized exchanges are an important factor that cannot be ignored.
4. The LSD protocol may be suspended after the launch of the new public chain, so careful selection is required.
5. LSD has become an essential DeFi protocol for public chains.
6. LSD may become a new growth point for the income of traditional DeFi.
7. The wallet side is a potential LSD collaboration partner.

Discussion

1. LSD needs to balance yield with network security and governance participation.
2. The necessity of discussing the returns of the LSD combination is worth exploring.
3. LSD from other chains can promote network staking and DeFi development.
4. Node operators and centralized exchanges may be the biggest influencers in the LSD battle.
5. Non-PoS network assets may also design LSD products.