In recent months, the popularity of liquidity bets on derivatives (LSD) has soared, resulting in a surge in DEFI's cash flow. LSD is a relatively new type of token that allows speculators to increase potential returns by releasing the liquidity of the digital currency they bet on, such as ETH.

The popularity of LSD has exploded in all etheric ecosystems and is likely to become as popular in other layer 1 Internet, such as Polygon and Avalche.

LSD has long played a vital role in DEFI, accounting for more than 20% of all liquid deposition plans for TVL. By February 2023, LIDO alone-the larger liquid betting agreement at this stage-accounted for more than 17% of Defi TVL.

LSD may have started a strong rebound in DEFI activities, as this trend is likely to accelerate with the deployment of an upgraded version in Shanghai, which is expected to attract more warehousing and logistics operators, thereby increasing the need for LSD.

How does LSD stimulate DEFI themed activities?

After Etherum uses the POS consensus algorithm excavated by piles instead of piles, LSD has attracted the attention of Defi customers. ETH holders can now use their tokens to maintain the network and generate profits for the current year.

However, there are two standards that restrict the browsing of bets by general token holders. First, the minimum savings limit for adding blockchain certification wars is 32 ethernet (ETH). Second, before the etheric upgrade in downtown Shanghai, the role model ETH still sits on the wolf smoke chain, and even then, the reward will slowly become more and more available.

The liquid betting agreement solves the first problem based on the ETH of several holders to promote their participation in the Ethernet blockchain certification process. Thus, protocols such as LIDO allow ETH holders to invest without operating validator connection points.

The liquid betting agreement not only allows some savings to be made in the betting pool, but also gives derivative coins to the stockholder in the form of liquid betting derivatives (LSD) in proportion to 1:1.

Stakers can also use this LSD token in a wider range of Defi sales markets to take advantage of profit opportunities. Thanks to LSD tokens, gamblers can get a double benefit from the tokens they lock in, which would otherwise result in a bet reward.

How to make full use of LSD?

With LSD's Stakers, you can also take advantage of a variety of profit opportunities in the growing Defi industry. For example, they can raise capital and property by storing derivative tokens and using them as collateral for further marketing activities, and then pursue perfect and considerable profit opportunities on the borrowing platform.

A number of DEFI loan contracts have integrated LSD into the collateral market. Euler White Cat Finance is one of them. Such unmanaged loan contracts under the Ethernet allow users to lend and raise funds for a number of LSD, such as cbETH and Steth derivatives driven by Lido and Coinbase.

Recently, Euler White Cat has stepped up its strong support for cbETH, a LSD token publicly issued by Coinbase to ETH staker, which selects shares in the investment exchange. Before going public, cbETH holders could not use his collateral to drive other market opportunities. After the launch of strong support for this derivative product, Euler White Cat attracted about $29 million in this property alone, demonstrating the great potential of LSD in areas such as Defi.

Serapimchek, head of risk at the Euler White Cat Lab, commented:

"after being upgraded to collateral, the fact that the supply of cbETH in Euler has increased so rapidly overnight shows that investors and funds have a general enthusiasm for buying and selling LSD goods, not just the underlying ETH of Lido. With more than $1 billion of exploitable cbETH, the industry is bound to expand, as Defi traders use Euler to earn additional profits from cbETH or boost bets.

LSD's share of the DEFI market is likely to soar

Without stablecoins, it would have been impossible for Defi to prosper in 2020. In its heyday, stablecoins accounted for more than 30 per cent of the Defi market. LSD can do similar harm, thanks to their unique ability to boost betting profits.

According to the bet reward, the proportion of ether bets is only 14%, compared with 71% of Cardano and 62% of landslides, which is very low. ETH holders tend to be hesitant about bets, in part because of the restrictive criteria for locking ETH tokens when betting.

However, there is also good news. The upcoming Shanghai update will include a code called EIP 4895, which will allow bets on ETH withdrawals. This update will allow 1:1 interchange of portal drive chains marked as ETH. This will encourage more ETH to bet on liquid betting pools, which will contribute to the need for LSD and may lead to continued growth of Defi TVL.

Finally, other blockchain technologies, such as Polygon and Avalance, can benefit from their own LSD, which will help them compete with the Ethernet market and benefit the healthy balance of all Defi interior spaces.