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One week countdown to the Ethereum Shanghai upgrade: What opportunities remain on the pre-resurgent LSD track?

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ETH liquidity Pledge has grown into a $15 billion-plus market, and all these agreements will be ready in less than a week for the market changes brought about by the Shanghai upgrade.

原文标题：《以太坊上海升级一周倒计时：提前复苏的 LSD 赛道还有哪些机会？》

Source: Bai Ze Research Institute

Ethereum mainnet is about a week away from launching the Shanghai upgrade.

Liquid pledge derivatives agreements (LSD) and tokens seem to have woken up in the past 24 hours:

• $LDO +8.5%

• $RPL +8.9%

• $SWISE +11.3%

• $FXS +7.6%

• $SD +15%

ETH liquidity pledge has grown into a $15 billion-plus market. All of these agreements will be ready in less than a week for the market changes brought about by the Shanghai upgrade.

Since the beginning of the year, the total ETH pledged through liquidity has increased by 21% from 6.8 million to 8.23 million ETH. After the Shanghai upgrade, the risk of not being able to redeem ETH at its true value will disappear.

Therefore, in the larger time frame, I strongly expect that this will lead to a large flow of ETH into the LSD protocol, as it will generate more revenue for users.

1. Rocket Pool

Total ETH pledged: 441,000 ETH

Developments in the first quarter of 2023:

• Add 90,000 ETH

• Market share from 4.9% to 5.3%

• $RPL price +137%

The Atlas upgrade of the agreement, which will go live on 18 April, will allow users to release ETH pledges while introducing Gas optimisation, higher node operator incentives and the online 8 ETH mini mine pool. Therefore, a node can be run after this with only 8 ETH, and the return will be higher.

When running the node/minicore pool, the user must lock 10%-150% of the pledged ETH. $RPL as collateral (agreement insurance). Thus, the more ETH pledged on the Rocket Pool, the greater the $RPL market cap/price. Further solidify the economics of tokens.

2. Frax Finance

Total ETH pledged: 128,000 ETH

Developments in the first quarter of 2023:

• 82,000 ETH added (+175%)

• Market share from 0.7%, 1.6%

• $FXS price +122%

The number of pledged ETH on Frax has seen the largest growth this year and continues to increase rapidly in market share.

Frax continues to offer the highest pledge APR on the market today through its dual token model of frxETH and sfrxETH.

In addition, Frax will be upgraded further. Shortly after the Shanghai upgrade, Frax will be upgraded to V2, which will enhance frxETH's decentralized verification mechanism in addition to releasing ETH pledges. In V1, nodes can only be run by internal whitelists. In V2, anyone can be a node.

3. Manifold Finance

Manifold finance offers DeFi middleware solutions including MEV optimization, building blocks for users and validators, and more.

A few days ago Manifold announced that it was developing its own LSD protocol, mevETH.

mevETH will be a full-chain token using LayerZero technology, designed to provide higher pledge yield through increased revenue from MEV opportunities. They have received 25,000 ETH from Cream Finance and plan to launch in the next few months. It's worth watching.

4. Lido Finance

Total ETH pledged: 5.95 million ETH

Developments in the first quarter of 2023:

• 1.09 million ETH added (+22.5%)

• Market share from 74% to 72.3%

• Revenue from the agreement: $117 million

• $LDO price +152%

While Lido has lost some market share to competitors, it is still the largest player in the industry and the second largest fee protocol after Uniswap.

5. StakeWise

Total ETH pledged: 94,000 ETH

Developments in the first quarter of 2023:

• Add 10,000 ETH (+12%)

• Market share from 1.28% 1.18%

• Revenue under agreement: $1.68 million

• $SWISE +128%

While Stakewise is currently working on their V3 upgrade, the Stakewise will be one of the key components of the agreement and will be presented as a modular pledge: anyone can create the stakewise, and users can freely choose which stakewise to deposit the ETH in (different yields, stability, etc.).

6. Stader

Stader has already made $120 million TVL on multiple chains including Polygon, Fantom, BNB Chain, and will soon launch its own LSD protocol, ETHx.

One of the core features of ETHx is that anyone can run a node on just 4 ETH (and $SD worth 0.4 ETH).

Comparative analysis of LSD protocols

The table below shows the major LSD suppliers in the market and their respective amounts of collateral. Not surprisingly, frxETH has seen the largest relative increase in ETH pledges over the past 30 days. As long as they can keep delivering the highest yields, that growth is likely to continue.

The following table summarizes the protocols mentioned in this article and the data for native tokens.

The value/market value of the pledged ETH is a good indicator of the transaction valuation of these original tokens.

A high number = a lower valuation, indicating a high transaction value of $LDO given the value of the pledged ETH.

Of course, there are other factors to consider, such as the upcoming protocol upgrade, token economics upgrade, etc. According to this metric, the transaction value of $FXS is very high because Frax Finance is not only an LSD protocol, but also has many other revenue-generating products.

I believe there is a good reason for all of these LSD protocols to grow in the future, especially as the ETH liquidity pledge market expands.