Exploring the Market Dynamics of Liquid Staking Derivatives (LSDs)

arXiv:2402.17748v1 Announce Type: new
Abstract: Staking has emerged as a crucial concept following Ethereum's transition to Proof-of-Stake consensus. The introduction of Liquid Staking Derivatives (LSDs) has effectively addressed the illiquidity issue associated with solo staking, gaining significant market attention. This paper analyzes the LSD market dynamics from the perspectives of both liquidity takers (LTs) and liquidity providers (LPs). We first quantify the price discrepancy between the LSD primary and secondary markets. Then we investigate and empirically measure how LTs can …

arxiv attention concept cs.cr derivatives effectively ethereum introduction issue liquid market perspectives proof stake staking transition