Liquid Staking and LsdFi: A Twitter Space with Balancer
We were joined by Mike and Tritium from Balancer to discuss Swell’s swETH pool and how LSTs are becoming an important value proposition in the DeFi space.
May 5, 2023
As Swell celebrated the first $10,000,000 in TVL, we were joined by Mike and Tritium from Balancer, a decentralized automated market maker (AMM), to discuss Swell’s swETH pool and how LSTs are becoming an important value proposition in the DeFi space.
In case you missed it, here are the top five questions from the event:
1. What are we seeing in the LSDFi market at the moment?
LSTs are quickly becoming important for protocols across the DeFi space. We have seen an increase in AMMs and lending markets using liquid staking derivatives as collateral, and as we continue towards mass adoption of LSTs we are going to see an increasing role for them across DeFi applications.
2. How does Swell aim to target mass adoption in the LSDFi space?
Swell currently has a number of features that will be rolling out in 2023.
We are currently the only liquid staking protocol running a zero fee staking campaign. This is a part of our bootstrapping campaign to onboard users to Swell, who will be rewarded through our Swell Voyage that we will be launching towards the end of this month.
Following that, our next product release will be our vault feature later in the year. This is a big part of Swell’s mission to simplify the liquid staking experience for users by providing swETH holders with access to DeFi integrations directly from the Swell dApp.
3. What is the value of on-chain LST liquidity?
On-chain liquidity is important for DeFi integrations, whether that be for collateral or price feeds.
Whether the liquidity is on Balancer or another market AMM, the ability to pair the LST asset with interest-bearing ETH or just ETH is important. It is less about the need for liquidity and more about the value and use of the asset.
With Balancer’s pooling system, LPs can get better returns when using their ETH on the platform.
4. What is the value proposition of depositing swETH into the Balancer pool?
The way that Balancer routes liquidity means that we acquire a lot more volume on our platform.
If swETH is paired within an LST pool, whether that be with ETH or with another LST, the user will receive a positive return of investment that is competitive within the space.
Balancer also offers promising incentive structures. When you deposit swETH in Balancer you receive voting incentives for the swETH pool. As long as there is liquidity in the pool then the user is incentivised to deposit in it.
5. What potential integrations does Swell have that will lead to deeper liquidity on Balancer?
Swell will be rolling out new integrations throughout the year. Our Aura pool is currently live, and we will be integrating with Pendle in the coming weeks. This will deepen the liquidity on Balancer and open the door for new integrations across the DeFi space.