How to Earn 4.71% APR in ETH with an Index of LSDs


Before we get started, this is not a recommendation or endorsement to buy any token mentioned.

In March, the Ethereum network is anticipated to undergo the most important upgrade (Shanghai) since The Merge in September 2022. ETH holders have been staking tokens since the Beacon Chain, Ethereum’s Proof of Stake consensus layer, went live on December 1, 2020. Soon after the Beacon Chain, Lido Finance launched what would become the most dominant ETH liquid staking derivative (LSD) stETH, attracting over $7B in ETH by 2023. Despite all this growth, there's been a major hang-up: ETH stakers cannot withdraw their ETH, and many more are looking forward to withdrawals being enabled in March.

More than 16 million ETH, equivalent to $26B as of this writing, is staked on the Beacon Chain. In comparison to other PoS chains which see as much as 40-70% of circulating supply staked, the percentage of ETH staked (~13.2%) vs total circulating supply of ETH is lower. Many analysts believe this enabling of withdrawals will bolster staking participation.

All of this context has set the stage for the increased attention on ETH liquid staking derivatives (LSDs). LSDs have been the one way to easily access any divisible amount of staked ETH, with liquidity to enter or exit by trading the tokens. LSDs will continue to play an important role for allowing anyone to contribute to the PoS consensus that secures Ethereum and to further promote decentralization through competition of LSD protocols.

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