Liquid Staking Derivatives
Crypto Overview
Purpose and Utility
Liquid Staking Derivatives (LSD) are tokens that represent staked cryptocurrency assets, primarily Ethereum, while allowing users to maintain liquidity of their staked assets. When users stake their cryptocurrency through LSD protocols, they receive derivative tokens that can be traded or used in DeFi applications while their original assets remain staked.
Business Model Analysis
The core business model involves providing users with the ability to earn staking rewards while maintaining liquidity of their assets. This is achieved through a tokenization process where staked assets are represented by derivative tokens.
Platform Activity and Development
The LSD ecosystem has seen significant adoption, particularly through protocols like Lido Finance, RocketPool, and similar platforms. These protocols have substantial total value locked (TVL) and active development teams.
Token Distribution and Governance
LSD tokens are typically distributed based on the amount of assets staked by users, with protocol-specific governance mechanisms in place. The distribution model varies by implementation but generally aligns with the amount of staked assets.
Revenue Model and Technical Implementation
The primary revenue stream comes from staking rewards, with protocols taking a small fee for operation costs. The technical implementation involves smart contracts that manage the staking process and token minting.
Crypto Impact
To assign a comfort level investing in Liquid Staking Derivatives from a halal perspective we need to determine whether it has a net positive or negative impact.
Towards this end, the table below is used to tally all the positive and negative considerations our members can think of related to Liquid Staking Derivatives.
If you don’t see something that should be listed, positive or negative, feel free to submit your own contribution using the button “Contribute”.
We will review your contribution for accuracy before publication.
Importantly, you can review listed contributions and vote on which one you think has the greatest impact, positive or negative.
You only have one vote per asset so use it wisely.
You can change your vote if you change your mind.