Will Curve find breathing space in the crowded LST sector?

• The Liquid Staking Finance (LST) sector saw increased competition and growth.
• Curve Finance adapted to competition but faced challenges with developer numbers and token dynamics.

The Liquid Staking Finance (LST-fi) sector is undergoing substantial changes, with Curve Finance [CRV] navigating the rising tides of competition.

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As more participants enter the liquid staking space and established protocols make improvements, the market has become highly competitive.

Looking at the LST sector

In October 2023, the LST-fi sector displayed interesting dynamics. Approximately 23% of Ethereum’s total value was staked, amounting to $17.51 billion out of $186 billion.

Within this, 4.1% of the staked assets found a home in LST-fi, totaling $724 million. These figures indicated an area with vast potential, poised for exponential growth, potentially up to 257 times its current state, according to DeFi mochi’s data.

Despite a general slowdown in Total Value Locked (TVL) growth on a protocol level over the past month, the LST-fi sector displayed resilience. New market entrants contributed to the sector’s expansion, adding around $200 million in TVL.

Source: Dune Analytics

New entrants and old

Eigenlayer, a newcomer, managed to secure an impressive 28.7% market share in just four months. With a valuation of $500 million in its most recent funding round, it effectively established itself as a key player in restaking ETH.

Its TVL surpassed that of LybraFinance V2, which maintained its dominance in the LST-fi sector with over $200 million TVL, outpacing competitors like Raft Finance and Prisma Finance.

State of LST-fi (October 2023)
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Eth staked: 23% ($17.51B of $186B)
LSTs used in LST-fi : 4.1% ($724m of $17.51B)
Potential growth of sector: 257x

The LST-fi landscape has changed dramatically over the past 2 months with new competitors… pic.twitter.com/1RPEHRnHAR

— Defi_Mochi (@defi_mochi) October 14, 2023

The competitive dynamics in the LST-fi sector were further evident through the decline in Raft Finance’s stablecoin dominance to a mere 6.8% TVL in September. This fall coincided with the launch of Lybra V2 and Prisma Fi.

Prisma Finance, while maintaining a 17.8% market share, has faced certain challenges due to capital constraints. In contrast, Libra’s $eUSD and $peUSD tokens have gained a strong foothold, representing over 64% of the entire LST-fi CDP market.

Additionally, crvUSD experienced sustained growth by drawing TVL with strong support from Curve Finance’s ecosystem.

Realistic or not, here’s CRV’s market cap in BTC’s terms

State of Curve

Consequently, Curve Finance’s revenue surged by 50.1% over the past month. However, a decline in the number of core developers working on the platform by 30.33% during the same period is a cause for concern, as it may pose challenges to the protocol’s continued growth.

The CRV token itself witnessed a decrease in price over the past month, prompting questions about investor sentiment. Furthermore, the decline in whale interest in CRV, as indicated by the reduction in the percentage of top addresses holding CRV, raised additional concerns.

Source: Santiment