Liquid Staking Token Ratings
Discover and invest in the most profitable business model in DeFi
Hey Investor 👋🏻
I’m Luca and welcome to a new edition of Altcoin Investing Picks.
Every Thursday, I send exclusive tips & opportunities to help you make (more) money with altcoins.
Today I’m going to share the best liquid staking protocols to buy based on our value investing framework which aggregates fundamental metrics discounted by the market multiples.
Let’s dive in!
The Basics
Staking is the process of locking up a certain amount of cryptocurrency in a wallet to support the operations of a blockchain network.
However, once a user stakes their tokens, they are often locked and become illiquid, meaning they can't be easily accessed or sold.
Liquid staking aims to solve this problem by providing stakers with a tokenized representation of their staked assets. This token can be traded, used as collateral, or otherwise utilized in the DeFi ecosystem, making the staked assets "liquid."
In fact, LSD protocols as a category has surpassed lending, bridges and decentralized exchanges (DEXs) in total value locked (TVL), to take the top position at around $45 billions.
The Opportunity
The liquid staking sector became the most profitable business model in DeFi: Lido Finance (which currently controls the market with nearly $30b of assets staked) has surpassed Uniswap as the most successful app on Ethereum in terms of fees.
The Lido protocol takes a 5% fee on the yield it pays out to its depositors. An additional 5% is paid to entities running the physical hardware supporting the system.
Token Ratings
The ratings reflect the long-run potential of each token relative to the liquid staking sector.
The rating scale is as follows:
✅ Undervalued: We expect this token to outperform the sector.
➖ Fairly Valued: We expect this token to perform in-line with the the sector.
❌ Overvalued: We expect this token to underperform the sector.
Let’s go!
Sector Benchmarks
✅ Undervalued Tokens
We expect these tokens to outperform the sector: