The emerging market for liquid staking tokens has recently witnessed a surge in interest, as evidenced by the success of Raft, a stablecoin issuer backed by staked ether (stETH) from Lido. Since its inception just three weeks ago, Raft has amassed a total value locked (TVL) of over $55 million, marking a staggering increase of 4,595% from June 5.
This swift growth in Raft indicates a thriving market for liquid staking tokens, which allow users to maintain liquidity while locking their ether to earn rewards for securing the Ethereum blockchain. Notably, other protocols aiming to create stETH-backed stablecoins, such as Lybra, have experienced a plateau in their TVL at approximately $180 million over the past month. However, their eUSD stablecoin maintains a market cap of $84 million, compared to Raft’s R token, which currently sits at $29 million.
The liquid staking sector now boasts a combined TVL of over $20 billion, surpassing decentralized exchanges, lending platforms, and bridging protocols to become the top contender in the DeFi space. Raft CEO David Garai predicts that Liquid Staking Derivatives (LSD) will continue to dominate DeFi for the foreseeable future.
In the coming weeks, Garai also revealed plans to introduce additional staking derivatives as collateral, which would significantly increase their TVL further. While Raft primarily revolves around its R stablecoin, there has been ongoing discussion regarding the launch of an additional token called RAFT. This token aims to empower community members and contribute to the decentralization of the protocol, as confirmed by Garai.
Although the rapid success of Raft in the liquid staking sector has generated enthusiasm, it is essential to consider its sustainability alongside other stablecoin issuers like Lybra. As the market continues to evolve, it will be crucial to monitor how the competition between liquid staking token providers unfolds and how market shares are distributed.
In summary, the booming market for liquid staking tokens is increasingly attracting attention, with the dramatic rise of Raft’s TVL serving as a prime example. The success of Raft’s R stablecoin and its competitive position against Lybra highlights the potential of liquid staking derivatives to maintain dominance within the DeFi space. However, it is worth considering the long-term sustainability of these models, given the need for continuous innovation and adaptability to maintain their leading positions.
Source: Coindesk
