Louis Cooper, analyst at DeFi team Fungi Alpha, shared his views on the potential beneficiaries of the upcoming hotly anticipated "unstaking" from the Ethereum (ETH) PoS deposit contract.
DeFi analyst indicated mid-cap protocols of "LSD narrative"
Mr. Cooper foresees a "gold rush" that might give a boost to liquid staking derivative (LSD) protocols with the activation of Ethereum (ETH) upgrade Shanghai. As depositors will be able to unlock their ETH, interest in liquid staking will spike.
Over $27 billion in $ETH will be unlocked with the Shanghai upgrade.— Louis Cooper (💙,🧡) 🍄 (@LouisCooper_) February 28, 2023
This means the gold rush for LSDs market share has begun and major competition to provide the highest APR has insued.
The question is, who will win?
Here's 9 LSD protocols that have a chance: 🧵 👇 pic.twitter.com/a6Z7DU9R8z
Here is why some DeFi protocols might meet an increased inflow of new users and fresh liquidity. Also, native governance and rewards assets of the protocols might see their capitalization metrics growing.
Pendle Finance (PENDLE), with a recent launch on Arbitrum and Stader Labs (SD) with the opportunity to join staking with four Ethers (ETH) are examples of such protocols. Hord (HORD), Bifrost (BNC), SharedStake (SGT) and StakeWise (SWISE) also look like smart bets ahead of Shanghai.
Some protocols even launched an aggregation service, not unlike Yearn Finance (YFI) did in DeFi Summer 2020. Liquid Staking Derivatives (LSD) is one of them.
As covered by U.Today previously, mainnet activation of hardfork Shanghai is expected as soon as this month. Ethereum (ETH) enthusiasts will be able to unstake the deposits they were making since December 2020.
Major warning ahead of Ethereum Shanghai
Besides promising mid-caps and low-caps, Mr. Cooper highlighted heavyweights Frax Finance (FXS), RocketPool (RPL) and Lido Finance (LDO), the three most popular liquid-staking vehicles.
At the same time, he warned that among growing euphoria, everyone will label what he/she is building as a "liquid staking derivatives platform." As such, potential investors should always stay super-cautious and do their own research.
"LSD mania" in crypto started gaining traction in January 2023. Multiple assets — RPL, LDO, FXS — have already registered triple-digit pumps.