BTC-Newswire

All you need to know about LSD tokens and the Ethereum protocol

Press Releases Crypto News AMB-Crypto All you need to know about LSD tokens and the Ethereum protocol

Liquid Staking Tokens control 41% of staked ETH, raising concerns about dependency and leveraging risks.
Lido and Rocket Pool dominate, witnessing increased interest in stETH and rETH tokens.

Liquid Staking Derivative protocols have been increasingly occupying the DeFi space, gradually becoming dominant players in the Ethereum[ETH] staking arena. As a result, the tokens associated with these protocols experienced a massive surge in interest and adoption.

Is your portfolio green? Check out the Ethereum Profit Calculator

LSTs on the rise

According to Kate Young Ju, an analyst on CryptoQuant, Liquid Staking Tokens (LSTs) have successfully utilized 41% of the total ETH staked in the ecosystem. This high level of utilization raises concerns, as it indicates a significant dependency on this particular form of staking.

Source: glassnode

Furthermore, it was worth noting that these LSTs were leveraged by a factor of 2, introducing potential dangers and weaknesses to the ecosystem. Leveraging amplifies both gains and losses, making investments more volatile and susceptible to market fluctuations. This increased risk can pose challenges for participants involved in LSTs and may impact the stability and resilience of the ecosystem as a whole.

At press time, the largest players in this sector were Lido and Rocket Pool. The staked ETH tokens associated with both protocols, stETH and rETH respectively, witnessed a notable surge in interest and usage. This surge was evident from the growing number of token holders, indicating an increasing interest among various addresses.

In addition to the growing number of token holders, the velocity of these tokens also witnessed an uptick. This suggested that the frequency with which these

Go to Source to See Full Article
Author: Himalay Patel

Did you like this?
Tip BTC Newswire with Cryptocurrency