LSDs (Liquid staking derivatives) are the most dominant narrative in the crypto market in the first half of 2023, if not the whole year. As we can see, LSD-related tokens have been leading the way since January 10th of this year. Pooling pledges and offering higher yield strategies have become a core competitive point in the LSD space, with a number of quality projects emerging.
One of the high-profile LSD eco-projects on Arbitrum, EtherKEY, is set to become a liquidity pledge game changer in the future and the next gem you are looking for.
The hottest track combined with the strongest second layer
Currently, Arbitrum is the largest TVL project in the Ethernet Layer 2 scaling solution at 2.98B, accounting for 3.01% TVL share of all networks, and a further 49.51% TVL share in L2.
Arbitrum Rollup is an off-chain protocol managed by on-chain Ether contracts, so to be precise, Arbitrum is not a blockchain, but an off-chain transaction uploaded to the Ether mainnet through compression algorithms. This approach can partially solve the congestion problem faced by Ether, in order to achieve the advantages of fast transactions, low gas fee, security assurance, and good user experience.
The Ether Shanghai upgrade will allow pledgers to withdraw pledged ETH from the beacon chain. this means that over 16.4 million ETH (equivalent to $26 billion) pledged before and after the merger will be available for withdrawal, and the original Shanghai upgrade has been rescheduled for April, keeping the LSD circuit hot.
EtherKEY, the supernova protocol to be released on the Arbitrum LSD track, may lead the next LSD narrative.
Security + Compound Income caters to market demand
Liquid Staking has been an important area of the ethereum ecosystem, but it faces some major challenges: centralized security and scalability gains.
Lido, Coinbase and Kraken control more than 50% of ETH pledges, 90% of which are entrusted to licensed operators, and with frequent theft of funds from on-chain contracts, security is a huge challenge.
On the other hand, LSD services with unlicensed nodes are difficult to meet the demand of ordinary users' revenue due to the high threshold of pledging for ethereum collateral.
As a composite protocol, EtherKEY has multiple benefits:
Defi income, the agreement will seek the highest rate of return in defi while ensuring high safety of assets (90% will be invested in more stable return low risk projects and 10% will be invested in slightly higher risk more stable return projects including but not limited to Curve, Convex, Aura, Balancer, Pendle, AAVE, etc.).
LP proceeds, EtherKEY protocol's Protocol Controlled Liquidity (PCL) mechanism, the vast majority of Swap proceeds will belong to the $EKEY stakeholder.
Ecological revenue, EtherKEY continues to expand ecological applications, Swap, lending, gamefi, NFTFi, decentralized contracts and other ecological revenue will all be empowered to the token EKEY.
Repurchase and destroy, EtherKEY disperses assets into liquidity pledge agreements by automated proprietary smart contracts according to the best return strategy, resulting in a pledge APR return of 30%, of which 10% of the return will be returned to the pledge user as the base LSD return, and the other 20% of the return will be repurchased and destroyed for the token EKEY.
On the other hand, the security of the assets pledged by EtherKEY is ensured by various aspects, one is the asset neutrality and the other is the multi-signature address using asset mechanism to protect the security of the protocol.
Trillion dollar eco-cluster provides grand narrative
EtherKEY, the most creative pledge protocol, will create a trillion dollar ecological cluster for users in the future. This includes the infrastructure of lending, DEX, wallet, etc.
LSD is a quality collateral for lending agreements, LSD is essentially an interest bearing ETH deposit and also needs lending agreements to get liquidity at any time, EtherKEY will launch its own lending product around LSD, custom optimized for LSD.
LSDs need to compete for liquidity in DEX for higher stability and revenue. And DEX will gain from the LSD trading pool. LSD increment will drive DEX's TVL, trading volume, revenue, etc. By relying on the prosperity of Arbitium ecosystem, EtherKEY DEX will benefit from building on LSD DeFi Lego.
It is foreseeable that the birth of EtherKEY makes the narrative of ETH 2.0 more magnificent, LSD is just the beginning, global trillion dollar assets will eventually be derived on the chain, and on-chain derivative assets will redefine the new world financial philosophy.