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    All Things Digital Assets

    Liquid Staking Derivatives with Adam Campbell from Staking Rewards

    Sun Jul 23 2023
    EthereumLiquid StakingStaking RewardsDeFiLIDORocket PoolFRAX FinanceCoinbaseBinanceSmart ContractsSRE

    Description

    The episode covers Ethereum staking and liquid staking, major players in the liquid staking market, risks and innovations in liquid staking, emerging protocols and market movements, and market fluctuations and staking rewards.

    Insights

    Liquid staking tokens have reached a market cap of over $18 billion.

    Liquid staking allows for double yield by earning rewards from staking and additional yield from liquidity pools.

    LIDO has over 70% market share in the liquid staking market.

    Rocket Pool has over 3000 validators and a lower barrier to entry for running a node compared to LIDO.

    Coinbase is a fully regulated and publicly traded company.

    APYs for staking rewards are anticipated to go down over time.

    Decentralized platforms offer more transparency through smart contracts.

    The future of East Taking involves innovation in liquid staking protocols like eigenlayer and LST5.

    SRE will combine LIDO, Rocket Pool, and Frax in its strategy.

    Regulation in the crypto industry can bring positive changes and clear out speculators.

    The halving of digital assets has historically been a good marker for market fluctuations.

    Interest rates play a significant role in driving investments in digital assets.

    Larry Fink's endorsement of Black Croc as the biggest digital asset firm is seen as very bullish.

    Staking Rewards is launching a risk-managed Staking Index product called SREs in collaboration with SpoolFi.

    Chapters

    1. Ethereum Staking and Liquid Staking
    2. Major Players in Liquid Staking
    3. Risks and Innovations in Liquid Staking
    4. Emerging Protocols and Market Movements
    5. Market Fluctuations and Staking Rewards
    Summary
    Transcript

    Ethereum Staking and Liquid Staking

    00:00 - 08:03

    • Ethereum's staked ETH surpassed 21 million this month.
    • Liquid staking derivatives are a key driver of the staking ecosystem.
    • Adam Camprol from staking rewards joins to discuss the liquid staking ecosystem.
    • Adam got into blockchain after the crash in 2017 and is now with staking rewards as the growth manager.
    • Staking rewards offers tools, research, an API, and a verified staking provider program.
    • Ethereum transitioned to Proof of Stake last year and implemented Chapella upgrade in April.
    • The Chapella upgrade allowed for unstaking of Ethereum tokens, leading to increased demand for Ethereum staking.
    • Liquid staking allows participation without high upfront costs or technical requirements.
    • Inflows into Ethereum have increased with net staking inflows of $100 million per day.
    • Liquid staking tokens have reached a market cap of over $18 billion and surpassed decentralized exchanges in DeFi.

    Major Players in Liquid Staking

    07:37 - 15:12

    • Liquid staking tokens (LSTs) have reached a market cap of 18+ billion, surpassing the combined TVL of decentralized exchanges.
    • By providing your ETH to liquid staking protocols like LIDO, Rocket Pool, or FRAX, you can earn rewards and use the tokens in other DeFi applications.
    • Liquid staking allows for double yield by earning rewards from staking and additional yield from liquidity pools.
    • The retail market is currently the main target for liquid staking, with institutions still cautious about entering the market.
    • The three major players in liquid staking are LIDO, Rocket Pool, and FRAX Finance.
    • LIDO has over 70% market share and operates with around 30 validators. They focus on multiple chains, not just Ethereum.
    • Rocket Pool has over 3000 validators and a lower barrier to entry for running a node compared to LIDO.
    • FRAX is relatively new to the liquid-staking game but offers a range of services and higher yields than LIDO and Rocket Pool.
    • LIDO's token is ST ease while Rocket Pool's token is R ease. The difference lies in their approach to stablecoin pegging and reward accumulation.
    • Coinbase and Binance also have their own tokens (CBE's coin) in the liquid-staking market. Their regulated status provides confidence to retail investors.

    Risks and Innovations in Liquid Staking

    14:48 - 22:22

    • Coinbase is a fully regulated and publicly traded company, which gives confidence to retail investors.
    • Coinbase has around 1.1 million ETH stake with a market share of 11%, but they are losing market share to decentralized players.
    • APYs (Annual Percentage Yields) for staking rewards are anticipated to go down over time.
    • Lido and Rocket Pool allow users to use their tokens in other applications to double their yield.
    • Choosing between centralized and decentralized entities involves different risk profiles.
    • Decentralized platforms offer more transparency through smart contracts, but technical know-how is required to assess them.
    • Verified staking provider certification looks at business operations, transparency, insurance for slashing risks, etc.
    • Smart contract risk assessment includes audits, bug bounties, stress testing, and the team behind the project.
    • The future of East Taking involves innovation in liquid staking protocols like eigenlayer and LST5.
    • Protocols like Pendle Finance offer fixed rate yield staking and interest rate swaps.
    • There are over 50 new liquid-stake LST-Fi protocols that have launched recently, offering various strategies for generating yield.

    Emerging Protocols and Market Movements

    21:55 - 29:28

    • The DeFi ecosystem is seeing significant innovation with the emergence of new protocols.
    • SRE is a robust way to stake Ethereum and will be the first on-chain product for the company.
    • SRE will combine LIDO, Rocket Pool, and Frax in its strategy, aiming to provide stable staking rewards.
    • The launch of SRE is expected within the next couple of weeks.
    • The approach of SRE focuses on risk management rather than maximizing yield, which may appeal to institutions.
    • In terms of AUM, StakeHound aims to see at least a million AUM within the first few weeks.
    • Regulation in the crypto industry can bring positive changes and clear out speculators.
    • The halving event in Bitcoin is seen as an interesting marker for future market movements.

    Market Fluctuations and Staking Rewards

    29:02 - 30:42

    • The speaker does not try to time the market but instead focuses on building during down periods.
    • The halving of digital assets has historically been a good marker for market fluctuations.
    • Interest rates play a significant role in driving investments in digital assets.
    • Larry Fink's endorsement of Black Croc as the biggest digital asset firm is seen as very bullish.
    • Staking Rewards is launching a risk-managed Staking Index product called SREs in collaboration with SpoolFi.
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