What is LSDFi?

What is LSDFi?

LSDFi combines LSD (Liquidity Staking Derivatives) with DeFi, creating a DeFi protocol built on the foundation of liquidity staking derivatives. Leveraging the composability of DeFi protocols, LSDFi offers enhanced profit opportunities, maximizing fund yields.

Typically, LSDFi comes with derivative tokens such as stETH, rETH, wstETH, etc., which holders can freely trade on the market, providing liquidity and yield for stakers. For instance, by depositing ETH tokens into Lido Finance, one receives stETH tokens as proof of stake. These stETH tokens can then be staked in LSDFi protocols for lending and borrowing, significantly boosting annualized returns without requiring active management.

LSDFi utilizes LSD as collateral or assets, offering additional profit opportunities and functionalities such as lending, trading, stablecoins, and indices, thereby expanding potential earnings.

What is Lybra?

Lybra Finance, one of the most prominent projects in the LSDFi arena, currently boasts a staggering $86.85 million in TVL. As an overcollateralized lending protocol, Lybra allows users to deposit ETH or stETH and stake them on the LDO platform. The system automatically converts ETH into stETH, then generates algorithmic stablecoin eUSD, providing users with an annualized interest rate of 8% on eUSD holdings.

For example, with $eUSD, users can use it for staking with a collateralization ratio of 150%. If one deposits $150 worth of stETH, they can receive 100 eUSD, with each eUSD pegged to 1 USD. Upon becoming an eUSD holder, users can earn two types of income: one from the staking of stETH itself and the other from Lybra Finance governance token $LBR as a subsidy.

About Match Finance

Match Finance is a yield aggregator project built on the Ethereum network. It serves as an accelerator project for Lybra Finance and is the first and only subproject within the Lybra ecosystem. Match Finance enables users to stake or mint eUSD on Lybra, thereby providing liquidity to the Lybra ecosystem and creating a win-win situation with Lybra Finance.

Match Finance has received investments from institutions and investors, including Lbank Labs, MEXC Venture, NextGen Digital Venture, Paramount Capital, and Mr. Block.

Source: Match Finance Data

Challenges of Lybra

From the latest Lybra V2 mechanism, it can be observed that Lybra has implemented the dLP mechanism and penalty token burning mechanism to prevent inflation of the governance token $LBR.

dLP mechanism: The dLP mechanism requires users to provide liquidity to the eUSD pool to earn more esLRB tokens. The value of the liquidity pool must exceed 2.5% of LBR/ETH. For instance, if a user stakes 100 eUSD in the pool and wants to claim esLBR rewards, they must provide dLP worth $2.5 of LBR/ETH. Failure to meet this requirement allows other users to purchase the tokens at a 40% discount.

Penalty Token Burning Mechanism: The penalty token burning mechanism extends the unlock period of esLBR tokens. If a user wants to redeem $LBR early, a penalty of 25%-90% will be imposed, allowing other users to purchase the tokens at a 40% discount.

These mechanisms effectively reduce the inflation of $LBR and stabilize its price trend. However, they also raise the barrier to user participation. For example, users who only want to stake must first invest 2.5% of the total value to purchase dLP tokens for locking before trading. Moreover, users face increased potential risks as both tokens in the LBR/ETH trading pair are unstable. In case of significant fluctuations, users must bear losses without compensation. The emergence of Match Finance aims to address these high barriers and provide users with ample profits.

How Match Finance Solves Them

Match Finance, as the name suggests, matches dLP holders with eUSD holders. For dLP users, their $LBR holdings primarily earn transaction fees and governance token rewards provided by the Lybra protocol. Additionally, dLP holders can earn a third stream of income through Match Finance, which is a portion of the rewards given by the Lybra protocol to eUSD holders. From the operational flowchart of Match Finance, we can see that 10% of esLBR is allocated to dLP holders.

On the other hand, some users only hold eUSD, especially before the introduction of Lybra Finance V2. For these users, there is no need to incur additional fees to participate in the platform, and they don’t even need to mint eUSD. Users only need to deposit their LSD assets into Match Finance to earn passive income. From the operational flowchart of Match Finance, we can see that 10% is allocated to dLP holders, 80% to LSD holders, and the remaining 10% is placed in the Match protocol treasury.

Source: Match Finance Operational Flowchart

Key Features of Match Finance

Match

Match Finance is responsible for matching compatible players holding dLP and eUSD. There are two pools, and once Match Finance receives dLP and LSD assets, these tokens are staked in the Lybra protocol. They are then exchanged for esLBR to complete the final trading action. This is the entire gameplay process of Match Finance.

Increase Liquidity

Match Finance also helps increase liquidity in the Lybra ecosystem. If users want to mint more esLBR or temporarily withdraw liquidity without being subject to Lybra’s penalty mechanism, Match Finance can provide a feature called mesLBR. Users can think of mesLBR as tokens that allow them to convert at any time freely. Match Finance will exchange all esLBR obtained through eUSD into mesLBR at a 1:1 ratio, helping users withdraw liquidity as needed.

Increase User’s Yields

Match Finance has increased mining rewards, adding pre-mining rewards for the platform token on top of the existing rewards. The overall return rate appears to be quite exaggerated at present. Staking dLP yields a return of 200.56% while staking ETH alone offers an annualized return rate of 84%.

Since they increased the rewards for the platform token, it has attracted a large influx of new capital. This is also why Match Finance reached a locked-in amount of $8 million within two weeks of its launch.

Tokenomics

Match Finance conducted a public sale at a valuation of $5 million, selling 15% of the total token supply. Participating users could only immediately receive 30% of the tokens, with the remaining 70% subject to a one-year linear unlock period. As a result, the short-term circulating supply of tokens is limited, and selling pressure is relatively low.

There are two types of platform tokens in Match Finance: $MATCH and $vlmatch. The main difference is that $MATCH is freely tradable, while $vlmatch is a locked token. Unlocking $vlmatch requires a 180-day waiting period, and early unlocking incurs a penalty, with the penalty funds distributed to other non-staking users. It is advisable to patiently wait for the 180-day unlock period to convert $vlmatch to $MATCH tokens.

$MATCH is the governance token of Match Finance, with a total supply of 10,000,000 tokens.

• 35% allocated for liquidity mining

• 15% allocated for Initial DEX Offering (IDO)

• 15% allocated for investors

• 10% allocated for the Lybra treasury

• 10% allocated for the team

• 3% allocated for airdrops

Source: $MATCH Token Distribution

Ways to Acquire $MATCH Tokens

To acquire $MATCH tokens, you can purchase them through cryptocurrency exchanges such as the reputable Gate.io exchange. Simply create a Gate.io account and complete the KYC process. After depositing funds into your account, you can directly buy $MATCH tokens.

Potential of Match Finance

The relationship between Match Finance and Lybra Finance can be understood simply as that of a subsidiary project to its parent project. Currently, Lybra has a fully diluted market cap of $110 million. Applying a sixth of this valuation, Match Finance’s valuation should be around $18 million. This indicates significant potential for growth compared to its initial public sale valuation of $5 million. Additionally, with the introduction of the mesLBL liquidity pool by Match Finance, it can accumulate more voting rights in Lybra, providing significant empowerment to the $MATCH token.

Conclusion

In summary, Match Finance primarily focuses on two main aspects: providing matching services for dLP and eUSD and enhancing liquidity for the Lybra ecosystem, thus fostering a mutually beneficial relationship with Lybra. Whether holding eUSD, dLP, or esLBR tokens, users can easily obtain higher returns through Match Finance.

Currently, Match Finance is the only accelerator project within the Lybra ecosystem and even across the Ethereum staking landscape. Its development is closely tied to Lybra, and considering the significant potential of the LSD track, which is still in its early stages, Match Finance presents more opportunities than risks.