One of the latest developments in the Ethereum staking ecosystem is the emergence of liquid staking tokens (LSTs), which are ERC-20 tokens that represent staked ETH. LSTs enable users to stake their ETH and receive tokens that can be traded, transferred, or used in other applications.
The Rise of LSD Tokens in the Surging Market
One example of LSTs is LSD tokens (Liquid Stake Dollars), which are issued by StakeHound, a platform that allows users to stake their ETH and receive LSD tokens in return. LSD tokens are pegged 1:1 to the US dollar and can be used as stablecoins in various DeFi protocols. Users can also redeem their LSD tokens for staked ETH at any time, subject to a waiting period.
According to StakeHound’s website, LSD tokens have seen a significant increase in demand and adoption since their launch in November 2021. As of June 2023, there are over 500,000 LSD tokens in circulation, representing over $500 million worth of staked ETH. StakeHound claims that LSD tokens offer users the best of both worlds: passive income from staking rewards and active income from DeFi yield farming.
As more ETH was locked in staking contracts on the Ethereum network, the price of LSD tokens also increased. In the past day, some of the coins that benefited from this trend were Lido Finance (LDO) and Rocket Pool (RPL). The latter was among the top three gainers with a nearly 10% increase in the last 24 hours.
Lido also expanded its dominance in the liquid staking market, as it now holds 37.85% of all ETH staked in liquid derivatives protocols. Coinbase is the second-biggest player with 11.88% of the market share and Rocket Pool has 7.72% of the market share.
Other tokens related to liquid staking have also recovered from the recent market dip, with pSTAKE Finance’s PSTAKE gaining 3% and StakeWise’s SWISE increasing nearly 4% in the past 24 hours.