Ether price charts reflect weakness, but inflow to LSDFi could prevent an ETH sell-off

Source: GlassnodeHowever, the disadvantage may be limited, as the need for liquid staking derivatives (LSDs) like Lidos stETH continues to grow, rising faster than investors are moving to sell.LSD activity is on the riseWhile the main usage cases on Ethereum of NFT trading and DeFi activity suffered a slump in June, the LSD narrative continued to grow.On-chain analytics firm Glassnode composed in its latest report that deposits to the staking contract have actually “been higher, or equivalent in scale to exchange inflows because Shanghai went live,” suggesting that more ETH is being moved toward staking than offering on exchanges.Ethereum exchange inflows (pink) versus staking deposits (blue). Source: GlassnodeThe overall ETH transferred in staking contracts is 19.7% compared to the central exchange balance of around 12.8%. Presently, 20% of Ethers total supply is staked with validators compared to over 40% for many other proof-of-stake blockchains like Solana (SOL), Cosmos (ATOM) and Avalanche (AVAX), suggesting space for growth.With yearly DeFi yields hovering around 1-3% for ETH on Aave and Yearn.finance and in between 3-5% for stablecoins, LSD derivatives use a base rate of 4% with a chance to make additional yields by using their liquidity in DeFi applications.Glassnodes report said that LSD derivatives “have actually seen increased activity within different DeFi protocols, with Lidos stETH being the most significant.
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Source: GlassnodeHowever, the downside might be limited, as the need for liquid staking derivatives (LSDs) like Lidos stETH continues to grow, increasing faster than investors are moving to sell.LSD activity is on the riseWhile the main usage cases on Ethereum of NFT trading and DeFi activity suffered a downturn in June, the LSD narrative continued to grow.On-chain analytics firm Glassnode wrote in its most current report that deposits to the staking agreement have actually “been higher, or equivalent in scale to exchange inflows considering that Shanghai went live,” recommending that more ETH is being moved toward staking than offering on exchanges.Ethereum exchange inflows (pink) versus staking deposits (blue). Source: GlassnodeThe overall ETH deposited in staking agreements is 19.7% compared to the centralized exchange balance of around 12.8%. Currently, 20% of Ethers total supply is staked with validators compared to over 40% for most other proof-of-stake blockchains like Solana (SOL), Cosmos (ATOM) and Avalanche (AVAX), showing room for growth.With annual DeFi yields hovering around 1-3% for ETH on Aave and Yearn.finance and in between 3-5% for stablecoins, LSD derivatives provide a base rate of 4% with an opportunity to earn extra yields by utilizing their liquidity in DeFi applications.Glassnodes report said that LSD derivatives “have seen increased activity within different DeFi protocols, with Lidos stETH being the most considerable.”The LSD sector appears to be the existing hotspot for DeFi gamers looking to maximize their yield.Related: Rapid development in DeFi-focused Ethereum liquid staking derivatives platforms raises eyebrowsEther cost analysis ETH recorded a favorable breakout from a bullish rising channel pattern with a target of $3,000 earlier this week.