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Will Aura Finance be the biggest winner from Shanghai's upgraded LSD circuit?

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"I firmly believe that Aura will be a quality project to promote LSD mobility and DeFi mobility"

Original author:X, DeFi researcher

Leo, Blockbeats

Recently, the market heat has turned to the LSD track, LDO, FXS, RPL-based tokens have risen. For the LSD track, the user focus is on increasing the liquidity of LSD, and one of the most talked about projects is Aura Finance --0xMaki A revenue management platform created based on Balancer ecology, which provides maximum revenue incentives to LP and BAL pledders on Balancer by allowing users to hold BAL (Balancer) and AURA Financ (Aura Financ). Aura Finance has not received as much attention as the LSD agreement, but the project has been doing things by stealth. DeFi researcher X wrote about Aura Finance, which BlockBeats compiled below:

Understand Balancer

With Ethereum's upcoming Shanghai upgrade, LSD token may continue to prove to be one of the best crypto narratives for 2023. Even so, I believe the biggest winner from the Shanghai upgrade environment will not be the LSD agreement, but Aura Finance, for the following reasons:

An upgraded pledge staking in Shanghai would encourage LSDS to incentivize their staking, which would neutralize the increased preference for single-side staking. Aura Finance is the perfect protocol to do just that, by giving Balancer voting incentives to facilitate more efficient liquidity provision.

The action of Aura Finance

It is important to note that Aura Finance has quietly partnered with almost all major LSD protocols including Lido, Rocketpool, Frax, Swell, Stakewise, Stader, Ankr and StaFi All of these agreements will provide incentives starting with the Shanghai upgrade phase. In addition, expect more other projects (EtherFi, Diva, Swell) to follow.

Unlike the Lido protocol, the only way to differentiate other LSD track protocols is through high yields. Frax's sfrxETH is a good example of this. Frax managed to capture 1.5% of the ETH pledge market in four months by offering yields of up to 40%.

For other protocols, in order to compete with stETH and cbETH leaders and gain market share, smaller participants need to vote incentive to obtain:

- Higher yields

- Increase liquidity

- Integrate DeFi

Rocketpool was kind of the first to realize AURA's potential, and since the incentives began three months ago, rETH-WETH's liquidity has increased sixfold, resulting ina significant increase in transactions and fees, and RPL remains one of the largest players on Aura Finance.

Better liquidity allows for more DeFi integration, and Aave, Pendle and other agreements are now seeking to join rETH, all of which can only be achieved through Aura Finance.

The RPL approach provides a paradigm for basic LSD growth:

Pay voting incentives -- increase mobility and TVL -- integrate to build a safe and differentiated product. Judging by the results, it is only a matter of time before other partnerships follow suit and start pouring money in.

Lido has already tested incentives on Paladin. In hindsight, Lido, the most capitalised of the LSD protocols, also started raising voting incentives to stem the flow of stETH to rivals.

With $2.35 in emissions generated for every $1 spent, Aura Finance's capital efficiency is 64 percent higher than that of the Convex, according to the data.

The battle for ETH's share of the pledge market will raise AURA's tide, as every LSD from Lido to Frax will want to join.

Catalyze other important items for AURA

OlympusDAO bought $200,000 and will buy another $800,000 in the next four months, and recently deposited about $70m worth of BPT in Aura. In addition, they sold their CVX position to buy AURA.

Frax Finance is also looking to build AURA, and as its founder Sam has hinted, Frax is discussing a pilot voting incentive program for enhanced FRAX pools.

The Synapse Protocol also proposes to migrate the SYN mobility to the Balancer and begin providing voting incentives on the Aura. Voting prizes of about $100,000 per round will increase vlAURA's revenue by about 30%.

Redacted cartel will launch its LSD-backed stable DINERO after upgrading in Shanghai and is likely to incentivize liquidity through its vlAURA holdings.

Stargate Finance, a major Aura stakeholder, also recently offered $210,000 in incentives, its largest investment in Aura to date.

Aave's incentive program has also been on the table recently and will push for a proposal to lock in veBAL in the coming days. GHO liquidity can also be stimulated through Aura.

Alchemixfi has transferred its ALCX liquidity to Balancer and will purchase AURA through its TOKE holdings, future Alchemix assets may be consolidated, and discussions about offering voting incentives are already underway.

When it comes to Arbitrum, once it can be done across the chain, it is possible to see a lot of Arbitrum projects entering its Aura ecology. For example, what happens when MAGIC, JONES, GMX, GNS, DOPEX, VSTA, etc. all start motivating vlAURA to vote with LSD?

The Aura collaboration continues, with subsequent new partners including Ribbon, Liquity, Pendle, Gearbox, Euler, and more.

70-80% of the recently unlocked vlAURA have been re-locked and sold almost nothing. Big names like Gnosis, Badger, and Messi are long-term holdouts, locking in the AURA in accumulations every few weeks.

Balancer core team members and seed round funders all stay the same (here are their addresses, both holding a lot of BAL and AURA) :

-0xAA857dDCe7b5b9cB17296c790CB40e8C11A3D4F0

-0x19ae63358648795aaf29E36733f04FCef683Aa69

-0xBB19053E031D9B2B364351B21a8ed3568b21399b

-0x4281E53938C3B1C1D3e8AFD21c02CE8512CDbc93

Nansen smart money has increased the number of tokens by five times over the past month.Arca Has also bought heavily in the past month:

Its address: 0 x23a5efe19aa966388e132077d733672cf5798c03

Aura Finance has grown so far that even without Aura's Balancer based expansion plan, 0xMaki and other contributors hinted at plans to integrate with other veTokens.

Catalyzed by all of the above projects, I am confident that Aura will continue to reach new revenue highs and become the de facto project to promote LSD mobility and DeFi mobility.