Liquid Staking Derivative Finance (LSDFi) is an innovative sector within the Ethereum ecosystem that finally started gaining significant traction during May. LSDFi protocol utilise Liquid Staking Tokens (LSTs) to enhance and refinance Ethereum’s staking yields as well as democratise staking service providers.
Despite LSTs currently accounting for over 40% of all staked ETH, only 15.6% of all ETH is staked. This discrepancy indicates a significant growth opportunity for LSDFi and LSTs. The recent Ethereum upgrade, known as Shapella, have catalysed a surge in new LST/LSDFi projects, further underscoring this potential.
Notwithstanding, May witnessed substantial increases in the Total Value Locked (TVL) in LSDFi protocols. Additionally, for the first time ETH's issuance was, net negative during the month, finally indicating a deflationary trend on the total supply.
Figure 1 - Net ETH Issuance and net supply decrease, by Parsec.
The future of LSDFi looks particularly promising as we head into the summer - this recent surge, coupled with increased staking rewards and improved liquidity, has brought LSDFi into the spotlight. This visibility, combined with the principle of composability in DeFi, is expected to drive the expansion of the DeFi ecosystem, leading to a bullish "LSDFi Summer".
We are particularly bullish given the market sentiment on the LSDFi Summer. This optimism is further supported by the amazing dashboard that includes all up and coming protocols on Ethereum Mainnet, Arbitrum, and Optimism that you can further explore in the dashboard **here** or below. These factors collectively contribute to a strong and optimistic future for LSDFi!
Total Crypto Market Cap: $1.176T (-1.76%)
DeFi TVL: $46.55B (-4.22%)
Stablecoins: $129.23B (-0.91%)
Memecoins, huh? They were quite the talk of the town these past few weeks - take PEPE, for instance. This little token has seen a sixty-fold increase in valuation during its spectacular run up. Yes, you read that right. Sixty-fold. It's been outperforming all the big boys like Solana, Avalanche, Polygon, and even Doge. These type of digital assets, driven by liquidity and belief, have been making headlines due to their explosive growth and the narratives that shape them. Now, let's dive into some numbers. PEPE was launched on April 16th and has since experienced a meteoric rise, achieving a remarkable market cap of over $1.7 billion on May 5th. This growth has been driven by intense trading activity, with more than 2,000 ETH consumed in on-chain transactions within a single 24-hour period. According to Etherscan, over 118,000 individual wallets own this specific asset, PEPE. That's a lot, right? But wait, there's more - older memecoins like Shiba Inu are held by over 1.4 million wallets. To put that into perspective, established protocols like Aave and Compound each have only about 300,000 unique wallets holding their tokens - crazy fast adoption curve!
Memecoins are a bit of a double-edged sword - on one hand, they demonstrate the power of decentralisation and permissionlessness, showing what's possible when anyone can create their own digital assets but on the other hand, they also highlight the potential dangers that come with it, the allusion of potential and significant returns, since these assets trade with no fundamentals and entirely on momentum and "vibes", making them highly volatile and risky. Despite the inherent risks, exchanges have been raking in the profits from these coins, with daily earnings reaching $1 million given the billions in volume.
The trading dynamics of memecoins alike are strikingly special and particular, often somewhat resembling those of Ponzi schemes.
Figure 2 - PEPE $2B 24h volume on Binance, on May 5th.