Welcome to the World of LSTs
Liquid Staking Tokens
Exploring the Dynamic Capabilities of Liquid Staking Tokens (LSTs).
Whether you're an occasional crypto investor or a dedicated DeFi enthusiast, you've probably caught wind of the excitement surrounding one of the most exhilarating new asset classes to emerge last year: Liquid Staking Tokens (LSTs). LSTs offer a representation of the value of a user's staked TONCOIN, opening up fresh avenues for liquidity and the potential for enhanced yields.
Understanding LST's
LSTs function as tokens representing a user's staked TONCOINs, thereby introducing fresh liquidity and creating enhanced yield possibilities. They serve as verifiable proof of staked TONCOINs held within TON staking pools. This addresses the ongoing dilemma of having to make a choice between staking TONCOINs to earn rewards and preserving their liquidity for other activities that yield profits.
As LSTs are fully tradable, individuals can stake their TONCOINs to generate passive income while concurrently utilizing their LSTs across various DeFi applications that generate revenue. This has provided a resolution to the liquidity challenge associated with staked TONCOINs, ushering in a new era of high-yield investment opportunities for one of the most reliable assets in the cryptocurrency realm.
The Present State of the LST Market
As of September 26, 2024, the Liquid Staking Tokens (LST) market within the TON ecosystem, with the TON price at $2.19, is defined by the following key players and their Total Value Locked (TVL) in dollars:
Tonstakers (tsTON): Commanding a 64% market share, Tonstakers' tsTON has 37,408,141 staked TON, equating to a TVL of approximately $216 million.
Bemo Finance (stTON): With a 23% market share, Bemo Finance's stTON comprises 13,523,062 staked TON, leading to a TVL of around $78 million.
Stakee (STAKED): Accounting for 9.9% of the market, Stakee's STAKED includes 5,780,118 staked TON, corresponding to a TVL of about $33.5 million.
Ton Whales (wsTON): Accounting for 2% of the market, Ton Whales' wsTON includes 1,122,802 staked TON, corresponding to a TVL of about $6 million.
Hipo Finance (hTON): Contributing 1% to the market, Hipo Finance's hTON has 602,563 TON staked, resulting in a TVL of approximately $3.5 million.
*All data referenced in this document is sourced from their respective platforms and Tonstat as of September 26, 2024.
This overview provides a clear picture of the TON LST market, highlighting the dominant players and their relative market shares, along with their TVL in dollars.
Classifying LSTs into Categories
LSTs can be categorized into two main groups:
Rebase LSTs: Rebase LSTs provide holders with an increasing number of LST tokens as they accumulate staking rewards over time.
Non-Rebase (Value-Accruing) LSTs: Non-Rebase (Value-Accruing) LSTs, on the other hand, appreciate in value as staking rewards accumulate, eliminating the necessity for additional LST transfers.
It's worth noting that, as of now, all LSTs on TON are of the Non-Rebase variety.
The Unexplored Opportunities within the LST Market
LSTs offer an enticing opportunity for DeFi investors, delivering passive income from staked TONCOINs while also enabling additional yield-generating activities through LSTs. Nevertheless, one might question whether the LST market has truly reached its full potential. Current data suggests otherwise.
Currently, only 12% of TONCOIN is staked, leaving an astonishing $25 billion worth of TONCOIN unused. To put this in perspective, more than 70% of Solana is staked. This indicates that, despite the ongoing enthusiasm, there remains substantial untapped potential in the LST market.
To enhance the Total Value Locked (TVL) of staked TONCOINs, it is essential to enhance the utility of LSTs. While the liquidity potential of LSTs is theoretically immense, the existing opportunities for yield generation are currently quite limited.
This is where Aqua Protocol steps in.
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