The LST Landscape Dilemma

Liquid staking has taken off since Ethereum staking became live, and while exciting at first - it has become clear that the proliferation of LSTs is not only confusing users due to the many unique token models and reward accumulation but also making it increasingly harder for protocols to communicate their value. Now that the Shanghai upgrade is done - the staying power of various LSTs will be heavily disputed and only those that have the best APRs and utility will achieve long-term success.

To compound this issue as time goes on, “late” entrants have an increasingly challenging time gaining traction and adoption through meaningful integrations and partnerships. As has happened in the past with BTC derivatives, the novelty of fresh ways to wrap a native asset soon loses steam - and while it can be argued that Ethereum’s LSTs have inherently longer staying-power, it’ll be inevitable that history repeats due to the minimal differentiation between product offerings. Application builders inherently want to prioritize the category leaders due to the availability of liquidity, with marginal improvements in value, and this creates a “long-tail” of protocols that see minimal traction and TVL.