What Happened on April. 10th | A Bearish View on Liquid Staking Token

TI Research

The Shanghai update is almost here. The Liquid Staking tokens, such as $LDO, $RPL, and, to a lesser extent, $FXS, are one of the key theses related to the Shanghai update. The popular reasoning is that Ethereum now has a very low staking ratio when compared to other PoS chains, and with the withdrawal function enabled, people will be more willing to stake their $ETH, increasing the overall market share of the liquid staking protocol. North Rock Digital's Hal Press offers some opposing viewpoints.

In his recent tweets, he expresses negative sentiment towards LSD exposure in the long term. He doesn't believe that staking participation will increase at a rapid pace after the Shanghai upgrade and predicts that it will likely peak at a lower level, possibly in the mid-20s.

Looking further ahead, the entire group may face challenges from fee compression and market share headwinds as new players enter the space and liquidity becomes less of a competitive advantage. Once staking participation reaches its peak, there will no longer be any growth drivers for the group, and revenue for each player will begin to decline.

As a result, people may eventually realize that the group is overvalued and destined to underperform $ETH in the long term.

You can find more discussion on why he thinks the liquid staking market will not grow further below his tweets.

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Liquid Staking Token




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