Background

The completion of the Ethereum Shanghai upgrade on schedule signifies a new era for Ethereum, as it marks the birth of the Crypto Treasury Bill. This groundbreaking development - the risk-free underlying assets brings about a series of paradigm change, reshaping the crypto world.

On the one hand, the potential offered by ETH POS Staking is too compelling to ignore for institutions and individuals seeking stable returns. Meanwhile, as new liquidity mining opportunities arises, it is hard for users to forgo POS rewards and opt to provide liquidity with ETH straightaway.

On the other hand, for the next generation of DeFi protocols, the LST(Liquidity Staking Token ) that bears the ETH staking yield emerges as the prime choice for liquidity assets. LST based on Ethereum native yields and its derivatives LRT (Liquidity Restaking Token) destined to stand out as superior alternatives to ETH in the realm of liquidity reserve.

With the rise of emerging scaling solutions such as Layer2 and other blockchain networks, the demand for LST liquidity is set to surge.

Current Challenges

Although ETH POS Staking holds the potential to revolutionize the blockchain industry, there are still underlying structural challenges in the current market that have prevented it from realising its full potential.

For Stakers

Individual stakers aspire to secure risk-free staking returns, encouraging further engagement in liquidity provision to increase capital efficiency. Yet, the increasing opportunities for yields through additional liquidity provision are likely to occur more often on Layer2 or blockchains other than Ethereum.

For Layer2s and other EVM-compatible blockchains

The emerging blockchains will have greater challenges in acquiring ample ETH liquidity due to the necessity of covering opportunity cost of risk-free yield on Ethereum. Notably, with the widespread adoption of restaking, this risk-free yield might reach 10% to 15%.

Therefore, the demand for an omni-chain LST protocol that facilitates seamless bridging of risk-free returns becomes collective.