Top 5 Best LSDs Project For Ethereum Staking

If you want your Ethereum to make a profit without having to sell it, then you have to put it on DeFi platforms called LSDs or Liquid Staking Derivatives.

Since the development of proof-of-stake (PoS) technology, the method of staking crypto assets has become the choice of many crypto investors to earn passive income. Now, staking platforms have developed even further.

Thanks to the Shanghai Ethereum upgrade, LSD is now a major trend in the DeFi (Decentralized Finance) space, providing a new way for crypto asset holders to earn additional liquidity and yield.

What is LSDs

Liquid Staking Derivatives (LSDs) are innovations in the development of crypto protocols that allow users to derive liquidity from staked assets and leverage them in other decentralized finance (DeFi) applications to earn profits.

LSDs were invented to make staking easier and unlock the liquidity of your staked ETH by allowing you to receive a receipt token that you can use to earn additional yield on DeFi protocols on top of staking rewards. 

Top 5 LSDs Project for Ethereum Staking

Here are the top five liquid staking protocols for ETH and some other cryptos as well. 

1. Lido Finance

Lido Finance can be said to be the first liquid staking provider and the current leader in the space with over 9 billion in stake tokens. The protocol was launched in December 2020 to allow users to stake ETH and in turn receive SD-ETH tokens, a tokenized version of their asset that are pegged 1 to 1 to ETH.  

In the background, after you deposit your tokens into Lido, they are staked on their respective proof-of-stake networks. It will cost You to pay a 10% fee on your earnings, which is split between node operators and the Lido DAO. 

Once you receive your SDEeth tokens, you can use them like regular ETH for trading on exchanges or even through the entire DeFi network. Basically, it will allow you to earn additional yields from your staked assets without having to take them out of the LIDO pool. 

Currently, LIDO offers up to 4.7% APR on ETH and has added support for other coins like Polygon, Solana, Polkadot, and Kusama. The platform also has its own native token known as LDO, which allows users to cast their votes in any decision that may shape the future of the platform.  

2. Rocket Pool

Rocket Pool was launched roughly a year after Lido Finance. Rocket Pool also removes the barrier to entry and staking by allowing users to stake as little as 0.1 ETH. This amount is pooled with ETH from other Stakers to add up to 16 ETH. 

Each Staker then receives R-ETH tokens depending on their deposits.  The remaining 16 ETH is contributed by an investor looking to become a node operator. 

Stakers can get up to 3.5% APR, while Node Operators get up to 7% APR in ETH rewards on top of the platform's native RPL token rewards. As for the platform fees, Rocket Pool charges 15% on Stacker's rewards, which entirely goes to node operators.  

Rocket Pool has its own token called RPL. The token powers the platforms with two DAOs, Protocol DAO and Oracle DAO. The former comprises community members who decide what changes will be made to the protocol, while the Oracle DAO is an invite-only group of members who deal with the platform's technical stuff. 

Unlike Lido, Rockapool currently offers staking services for only ETH. 

3. Frax Finance

Frax Finance started as a project that started out as a stablecoin and has expanded its ecosystem to offer ETH liquid staking services that will turn ETH into Frax ETH. This receipt token acts more like a stablecoin loosely pegged to ETH. 

Users then have two options. They can either use their FraxETH to provide liquidity on the ETH/FraxETH pool on Curve and benefit from the yield farming opportunities from the Curve and Convex ecosystem, or stake their FraxETH to receive staked Frax ETH or SFRAX ETH, which is the token that accrues staking yield. 

Currently, the APR for SFRAX ETH is at 5.6%, while the APR for providing liquidity in the Frax ETH/ETH pool stands at 7.2%, which is notably higher than other LSD platforms. 

Frax can pull this off as it benefits from a large quantity of CRV and CVX held in its treasury, giving them higher bribing power to vote for higher incentives in the form of Curve, Convex, and Frax tokens to be directed to their Frax ETH/ETH pool, which is how Frax ETH holders can earn higher yields by being liquidity providers. Currently, the protocol only supports the staking of ETH. 

4. Stakewise 

Stakewise launched in early 2021, it allows you to deposit any amount of ETH into their pool to receive an equal amount of staking ETH, whose stake token is called SETH2. 

Within a day of receiving SETH2, you can start accruing rewards in a separate token known as reward ETH or RETH2, basically meant to make tracking of rewards easier. The platform charges a 10% commission on these rewards. 

Stakewise also has its native token called SWICE, a token that allows holders to govern the platform's major decisions, such as fees paid by stakers or commissions paid to node operators. 

5. Staders 

Last but not least, we have Staders, a multi-chain LSDs platform that supports staking in multi-chains like NEAR, Fantom, and BNB, and plan to add an ETH LSD, ETHX, to its lineup this year. 

Based on the ETHX light paper, the yield is expected at 6.75%, with yields coming from both staking and MEV rewards. Stater has announced that from launch, anyone will be able to run Stater's ETHX nodes permissionless with an ETH bond requirement, one of the lowest in the space.

The platform aims to supplement these permissionless pools with permissioned ones operated by community-approved and reputable entities with good track records. 

Stater plans to launch ETHX this year. These are some of the most popular liquid staking protocols among ETH stakers in a space that is unlikely to have stopped growing. 

Since Ethereum's Shanghai upgrade, LSDs have been attracting a large number of crypto users. Lido overtaking DeFi's long-reigning leader in terms of TVL, MakerDAO as the largest DeFi protocol, is proof enough.

Do you think that the LSD narrative is here to stay, or is it just only hype? 

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