Liquid staking derivatives (LSDs) was one of the most highlighted DeFi narratives in 2023, particularly after the Shapella upgrade for Ethereum.

As LSDs gain momentum, an additional niche within DeFi has emerged to leverage this growing trend. Integrating LSDs with DeFi, the LSDFi segment expands upon LSD tokens, enhancing their utility and introducing new yield prospects for LSD token holders.

Let’s delve deeper into LSDFi in this post and how major LSDFi applications in MultiversX are pioneering liquid staking, starting with LSDs.

The Innovative Role of LSDs

LSDs represent ownership of staked assets within DeFi ecosystems. Users stake their tokens to support the network and receive liquid staking tokens (LSTs) in return, which they can use across various applications to maximize returns.

From providing liquidity to a liquidity pool or locking up assets in a smart contract to support the network’s operations, LST holders earn rewards through various income-generating schemes such as yield farming, lending, borrowing, and collateralization from dApps.

Enhanced liquidity and interoperability in the DeFi ecosystem can attract more participants seeking multiple income opportunities, thereby fostering growth and innovation within the space.

LSDs Meet DeFi: The Whole Picture

LSDFi protocols play a crucial role in offering diverse opportunities for users to maximize returns on their staked assets. They cater to a diversity of risk tolerance, investment strategies, and cryptocurrency choices:

• Decentralized Exchanges (DEXs): Enable trading and swapping of tokenized staked assets for added liquidity.
• Lending Platforms: Allow users to borrow against staked assets or provide liquidity for lending pools.
• Borrowing Platforms: Enable borrowing against staked tokens as collateral, facilitating leveraged positions or accessing liquidity without selling assets.
• Stablecoins: Introduce stablecoins backed by staked assets, providing stability and yield-bearing features.
• Index LSDs: Issue tokens representing diversified staked asset baskets, offering risk mitigation strategies for investors.
• Yield Strategies: Develop innovative yield-generating approaches with staked assets, fostering interest derivative markets and advanced DeFi yield opportunities.

LSDFi Key Players in MultiversX

LSDFi is still growing, with its applications emerging on networks like the MultiversX blockchain. MultiversX prioritizes fast transactions through adaptive state sharding, encouraging users to stake their assets (EGLD) to enhance network security and earn rewards simultaneously.

Through Liquid Staking, users can stake EGLD for another token within the ecosystem while continuing to earn rewards. This innovative approach goes beyond conventional rewards, highlighting the significance of LSDFi protocols in the network.

With that in mind, let’s look at the top LSDFi protocols on MultiversX and what each project uniquely offers.

Hatom Protocol: The Leading Liquid Staking Protocol on MultiversX

Hatom is the biggest liquid staking protocol on MultiversX, with $2.33M EGLD in Total Value Locked, according to DefiLlama.

When users stake EGLD on Hatom, they receive sELGD, an interest-bearing token derived from staked EGLD, and enjoy liquid staking APR. Additionally, through Hatom Novel Liquid Staking, users can earn a boosted version of sEGLD known as HsELD. HsEGLD combines staking rewards obtained from validators with borrowing interest earned by supplying assets on the Lending Protocol.

In late March 2024, Hatom launched their TAO Bridge to bridge Bittensor’s TAO to MultiversX and effectively deployed its Liquid Staking version, wTAO. Apart from its integration with Hatom products, wTAO is also part of the liquidity pools available on AshSwap and xExchange.

sEGLD, HsEGLD, and wTAO are liquid tokens that appreciate over time, offering immediate liquidity for staking rewards, farming, and trading within Dapps like AMM (e.g., AshSwap) and Lending Protocols like Hatom.

2. Salsa Liquid Staking

SALSA is a liquid staking protocol that operates on the MultiversX blockchain. SALSA users are introduced to LEGLD, the LST acquired by staking EGLD within the protocol at an almost 1:1 ratio, offering a real-time APR of 7.45%.

Participants stake their EGLD in the SALSA protocol and, in return, receive LEGLD as an LST. Holding LEGLD enables users to benefit from generated earnings and leverage them in MultiversX dApps like OneDEX.

LEGLD can be used for yield farming, trading, participation in xLaunchpad, and more.

3. AshSwap: Pioneering DEX on MultiversX for LSDs

As a leading Stable-swap AMM, AshSwap has stepped into this ground-breaking narrative by offering the best swap rates and yield-farming opportunities on our DEX. We have established a strategic partnership with the #1 Liquid Staking protocol on MultiversX, Hatom Protocol, to enhance more use cases on supported liquid staking tokens.

Currently, holders of Hatom’s sEGLD can provide liquidity to farm yields on AshSwap. Starting by staking your principal assets on Hatom to get LSTs, users can then put their LSTs to work on AshSwap pools to earn yields from trading fees, ASH emissions, and other bootstrapping incentives.

Liquidity providers in sEGLD — wEGLD pool are now earning up to 12.01% boosted APR by leveraging veASH.

Besides the Hatom Liquid Staking protocol, we also support other liquid-staked assets from JewelSwap. Last week, JewelSwap’s JWLMEX — JWLXMEX pool made its debut on AshSwap. JWLMEX and JWLXMEX are yield-bearing LSTs that are issued for nearly the same amount of MEX and xMEX being minted through JewelSwap, a DeFi protocol on MultiversX ranking 5th in TVL and offering Liquid Staking, Leveraged Farming, and NFT Staking solutions.

JWLMEX and JWLXMEX holders can swap, provide liquidity to farm ASH incentives on AshSwap, or stake in JewelSwap Energy-boosted farms for more yields.

By listing the JWLMEX-JWLXMEX pool on AshSwap, we are collaborating to enhance liquidity depth for both protocols. This enables our users to maximize their DeFi yields from their locked MEX without any trading restrictions.

Wrapping up

The LSDFi ecosystem, particularly within MultiversX, showcases the immense potential for enhancing liquidity and maximizing returns on staked assets. As demonstrated by leading protocols like Hatom, users can leverage LSDs to earn staking rewards while simultaneously participating in various DeFi activities.

AshSwap stands out as a pioneer DEX in the LSDfi ecosystem to enrich the utility of LSDs with more DeFi strategies.

In our upcoming plans, the AshSwap Aggregator is undergoing an upgrade to accommodate a wider range of liquid-staking tokens for smoother, more optimal, and low-slippage swaps.

Stay connected with AshSwap to explore the ever-expanding realm of DeFi possibilities!