A few weeks ago, I posted a deep dive on how most Liquid Staking Tokens were in Crisis.

Over the summer, LSTfi term was discussed & hyped around. LSTFi is about making the most of your LSTs, like creating stablecoins backed by them.

But here’s the catch: few people use LSTFi protocols. Even though everyone is talking about LSTs and how great they are, the numbers don’t lie. The LSTFi market is still pretty small compared to the potential demand.

And it just got more competitive with the launch of EigenLayer, a project that lets you "restake" your staked and liquid-staked $ETH. EigenLayer is a big deal; it already hit its LST limits on day one. Can other LSTFi projects keep up with this new challenger?

One thing to note is that most LSTFi projects are currently focused on stablecoins. Maybe that’s not enough to entice LST holders to try them out.

The TVL of liquid-staked ETH is around $16.7B,

but the TVL of the LSTFi protocols I looked at is only around $382M.

That means there’s a huge gap between the supply and demand of LSTFi products.

There’s a lot of room for innovation and growth in this space, and we expect to see more projects develop new ways to use LSTs.

That should make LST holders more interested in putting their tokens to work.

What do you guys think?

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