How Long Will the Ethereum LSD Narrative Last? Talking 2023 Trends with Nansen’s Martin Lee


Ethereum Liquid Staking tokens are through the roof. Lido is up 150% in a month, as is Frax Shares, while other protocols like Rocket Pool are also catching up.

But that is not all. NFTs are also seeing massive volumes for several weeks in a row, showing little sign of slowing down.

The question now is how long this positive trend will continue: is it a dead cat rebound or the start of a long-awaited recovery?

To help us crunch the numbers and interpret some of the string data it is martin lee – a data journalist from the popular cryptocurrency analytics company nansen.

Liquid Staking coins are trending higher, but for how long?

Ethereum LSD, or Liquid Stake Derivative Coins, has been the hottest story of 2023 so far, with many of the protocols seeing tremendous growth in value locked, and by extension, in popularity.

For those unfamiliar with the concept, we have a comprehensive guide on Ethereum liquid staking.

Unlike staking directly on the beacon depositor contract, LSD protocols allow users to stake their ETH and receive a synthetic version of it, a new token, per se, which can then be used in various DeFi applications for trading, cultivate and provide liquidity. , Etc.

Speaking on the subject, Lee outlined two main advantages that he says are part of the reason narrative has become so strong. For example, he noted that staking ETH directly on the smart contract is “really inefficient in terms of capital” due to a few things. First, the capital requirement is quite hefty (32 ETH) and the lockup period used to be unknown.


The natural solution to this would be liquid staking. You get a liquid token in exchange for what you have staked (in this case, ETH). For example, if you stake ETH with Lido, you get stETH, which is completely liquid and can interface with various DeFi protocols.

Liquid staking solves both the problems of the illiquidity of staked ETH and the high capital requirement to participate in ETH staking.

The native tokens of LSD protocols, like Lido’s LDO, for example, have been disappearing lately. LDO itself is up close to 150% in the last month, similar to other protocols of the type like Rocket Pool and others.

The catalyst for this seems to have been the recent announcement that the Ethereum Shanghai Update will hit the public testnet in February and the mainnet in 2023. This is a pivotal time for the Ethereum community because it will allow validators to unlock the 32 ETH they have. he participated in the Beacon contract for the first time. The consensus seems to be that this would increase demand for liquid equity alternatives, which is the predominant reason for their current popularity and rising valuations.

On when the narrative will inevitably die out, Lee says that most trends like this usually slow down on the date of the event that triggered their emergence in the first place, in this case, the Shanghai Update.

Usually the trend disappears on the date of the event itself. For example, the ETH merger was such a broad topic, but on the date of the merger itself, people stopped talking about it entirely.

NFT volumes also pop

At the time of our recording, NFT trading volume was through the roof and although there was some decline in recent days, the market did see a sizeable rally.

In fact, on January 17, ETH NFTs recorded five consecutive weeks of only rising volumes.

Source: Nansen

Commenting on the matter, Lee said that it is more or less in line with what we have seen in previous cycles.

Anytime we have long stretches of very boring action, where there’s basically no movement, prices are extremely stable, NFTs tend to have their own mini run every time that happens.

Over the last 2-3 months, price action in general has been extremely stagnant. Then the NFTs had their own mini-run, with some projects doing better than others.

To find out what Lee thinks this year’s trends will look like, as well as whether or not the Shanghai update will cause major selling pressure on the ETH price, feel free to watch the full video above.


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