SoK: Liquid Staking Tokens (LSTs) and Emerging Trends in Restaking

• URL: http://arxiv.org/abs/2404.00644v3
• Date: Thu, 26 Dec 2024 14:59:40 GMT
• Title: SoK: Liquid Staking Tokens (LSTs) and Emerging Trends in Restaking
• Authors: Krzysztof Gogol, Yaron Velner, Benjamin Kraner, Claudio Tessone,
• Abstract summary: Liquid staking and restaking represent recent innovations in Decentralized Finance (DeFi) Liquid Staking Tokens (LSTs), tokenized representations of staked tokens on Proof-of-Stake (PoS) blockchains, are the leading staking method. Restaking builds upon this concept by allowing staked tokens, LSTs or native Bitcoin tokens to secure additional protocols and PoS chains for supplementary rewards.
• Score: 0.0
• License:
• Abstract: Liquid staking and restaking represent recent innovations in Decentralized Finance (DeFi) that garnered user interest and capital. Liquid Staking Tokens (LSTs), tokenized representations of staked tokens on Proof-of-Stake (PoS) blockchains, are the leading staking method. LSTs offer users the ability to earn staking rewards while maintaining liquidity, enabling seamless integration into DeFi protocols and free tradeability. Restaking builds upon this concept by allowing staked tokens, LSTs or native Bitcoin tokens to secure additional protocols and PoS chains for supplementary rewards. Liquid Restaking Tokens (LRTs) unlock liquidity of restaked assets. This Systematization of Knowledge (SoK) establishes a comprehensive framework for the technical and economic models of liquid staking protocols. Using this framework, we systematically compare protocols mechanics, including node operator selection, staking reward distribution, and slashing. Our empirical analysis of token performance reveals that protocol design and market dynamics impact token market value. We further present the recent developments in restaking and discuss associated risks and security implications. Lastly, we review the emerging literature on liquid staking and restaking.

Related papers

• A Sea of Coins: The Proliferation of Cryptocurrencies in UniswapV2 [0.8192907805418583]
  We analyze the financial impact of newly created tokens, assessing their market dynamics, profitability and liquidity manipulations. Applying a simple buy-and-hold strategy, we are able to uncover some major risks associated with investing in newly created tokens. Our study provides insights into the risks and financial dynamics of decentralized markets and their challenges for investors.
  arXiv  Detail & Related papers  (2025-02-14T19:18:39Z)
• Mitigating Challenges in Ethereum's Proof-of-Stake Consensus: Evaluating the Impact of EigenLayer and Lido [4.606106768645647]
  The transition from a Proof-of-Work (PoW) to a Proof-of-Stake (PoS) consensus mechanism introduces a transformative approach to blockchain validation. This paper explores two innovative solutions: EigenLayer and Lido. We conclude with an evaluation of the combined potential of EigenLayer and Lido to foster a more resilient and inclusive ecosystem.
  arXiv  Detail & Related papers  (2024-10-30T19:58:46Z)
• MEV Ecosystem Evolution From Ethereum 1.0 [6.151915040556504]
  In traditional finance, there are possibilities to create values, e.g., arbitrage offers to create value from market inefficiencies or front-running offers to extract value for the participants having privileged roles. Such opportunities are readily available in DeFi ecosystems, where diverse participants engage in financial activities. In this survey, first, we show how lucrative such opportunities can be. Then, we discuss how protocolfollowing participants trying to capture such opportunities threaten to sabotage blockchain's performance. Finally, we review the current state of research trying to restore trustlessness and decentralization to provide all DeFi participants with a fair marketplace
  arXiv  Detail & Related papers  (2024-06-19T14:22:26Z)
• Enhancing Trust and Privacy in Distributed Networks: A Comprehensive Survey on Blockchain-based Federated Learning [51.13534069758711]
  Decentralized approaches like blockchain offer a compelling solution by implementing a consensus mechanism among multiple entities. Federated Learning (FL) enables participants to collaboratively train models while safeguarding data privacy. This paper investigates the synergy between blockchain's security features and FL's privacy-preserving model training capabilities.
  arXiv  Detail & Related papers  (2024-03-28T07:08:26Z)
• Large Language Models for Blockchain Security: A Systematic Literature Review [32.36531880327789]
  Large Language Models (LLMs) have emerged as powerful tools across various domains within cyber security. This study aims to comprehensively analyze and understand existing research, and elucidate how LLMs contribute to enhancing the security of blockchain systems.
  arXiv  Detail & Related papers  (2024-03-21T10:39:44Z)
• Transaction Capacity, Security and Latency in Blockchains [35.16231062731263]
  We analyze how secure a block is after the block becomes k-deep, i.e., security-latency, for Nakamoto consensus. We compare our results for Nakamoto consensus under bounded network delay models and obtain analogous bounds for safety violation threshold.
  arXiv  Detail & Related papers  (2024-02-15T17:43:13Z)
• Empirical and Theoretical Analysis of Liquid Staking Protocols [3.2963988742807295]
  Liquid staking protocols allow for earning staking rewards without the disadvantage of locking the capital at the validators. They are seen by some as a threat to the Proof-of-Stake blockchain security. This paper is the first work that classifies liquid staking implementations.
  arXiv  Detail & Related papers  (2024-01-29T17:56:45Z)
• Demystifying DeFi MEV Activities in Flashbots Bundle [36.64508078443365]
  Decentralized Finance, mushrooming in permissionless blockchains, has attracted a recent surge in popularity. Due to the transparency of permissionless blockchains, opportunistic traders can compete to earn revenue by extracting Miner Extractable Value (MEV) The Flashbots bundle mechanism further aggravates the MEV competition because it empowers opportunistic traders with the capability of designing more sophisticated MEV extraction.
  arXiv  Detail & Related papers  (2023-12-02T09:46:39Z)
• Uniswap Liquidity Provision: An Online Learning Approach [49.145538162253594]
  Decentralized Exchanges (DEXs) are new types of marketplaces leveraging technology. One such DEX, Uniswap v3, allows liquidity providers to allocate funds more efficiently by specifying an active price interval for their funds. This introduces the problem of finding an optimal strategy for choosing price intervals. We formalize this problem as an online learning problem with non-stochastic rewards.
  arXiv  Detail & Related papers  (2023-02-01T17:21:40Z)
• Token Spammers, Rug Pulls, and SniperBots: An Analysis of the Ecosystem of Tokens in Ethereum and in the Binance Smart Chain (BNB) [50.888293380932616]
  We study the ecosystem of the tokens and liquidity pools. We find that about 60% of tokens are active for less than one day. We estimate that 1-day rug pulls generated $240 million in profits.
  arXiv  Detail & Related papers  (2022-06-16T14:20:19Z)
• Decentralized Basic Income: Creating Wealth with On-Chain Staking and Fixed-Rate Protocols [0.0]
  We evaluate the mechanisms behind the decentralized finance protocols for generating stable, passive income. Currently, such savings interest rates can be as high as 20% annually, payable in traditional currency values such as US dollars. We will discuss potential pitfalls, assess how these protocols may behave in market cycles, as well as suggest areas for further research and development.
  arXiv  Detail & Related papers  (2021-07-29T20:21:55Z)

This list is automatically generated from the titles and abstracts of the papers in this site.

This site does not guarantee the quality of this site (including all information) and is not responsible for any consequences.