Supporting the LSD ecosystem, will Metis迎来第二波价值增长?

Original Author: Haotian

If the Lending platform of the POW public chain serves as the ecological foundation, then the LSD protocol of the POS public chain certainly holds the lifeblood of ecological development.

Recently, while the decentralized Sequencer process of @Metis L2 is in full swing, it has also been tirelessly supporting the development of LSD protocols like @ENKIProtocol, and the fundamental logic lies here. Undoubtedly, LSD will be the foundation upon which the Metis ecosystem builds its skyscraper. Next, let me share my thoughts:

1. The LSD (Liquid Staking Derivatives) protocol aims to allow ecological users to stake the native platform Token to POS mining nodes, thereby promoting the security and stable operation of the public chain platform. Essentially, the LSD protocol raises Tokens from users to support the normal operation of the Nodes, allowing users to participate in the POS mining Reward process.

To build a decentralized Sequencer node on Metis, the basic threshold is 20,000 METIS, which is a significant cost for node operators. If the LSD protocol first raises Metis assets and then allocates the corresponding staked Token to Sequencer Miners, it can not only lower the threshold for nodes to participate in decentralized Sequencer mining but also provide native Staking rewards for users staking METIS.
Over time, this will form a positive incentive flywheel between Sequencer Miners and LSD Staking: users stake Metis to LSD ------ lower the threshold for decentralized Sequencer ------ more Sequencers participate in mining ------ Token staking rate increases, chain security consensus strengthens ------ drives up Token asset prices ------ users want to stake more to participate in LSD. To some extent, developing the LSD platform is to further consolidate the decentralized Sequencer mining system.

Of course, there will be corresponding quota restrictions for LSD participation in Sequencer Miners to ensure a balance in the comprehensive capabilities of node technology, operations, and market, avoiding excessive resource concentration, which would contradict the fundamental essence of decentralized Sequencers.

Essentially, this is similar to the logic of developing Lending platforms on POW public chains, where miners can lend their mining reward assets to lending platforms to obtain stablecoins to pay for the electricity costs required for mining, achieving a derivative financial play that allows normal mining without selling assets to cover costs.

2. Metis is a layer 2 platform with METIS as its native Token, while Enki Protocol is positioned as the first LSD protocol on the Metis platform. The goal of the native layer 2 Token + native Layer 2 LSD is to bring a true source of liquid staking yield to the layer 2 platform. Why do I say this?

Previously, the TVL battle initiated by @Blast_L2 promised users not only points for Token exchange but also the major highlight that Blast could stake users' ETH to the layer 1 LSD protocol to earn yields, empowering the layer 2 ecosystem.

In this scenario, layer 2 absorbs native Tokens from layer 1 through cross-chain, which are then staked by the layer 2 platform operators on layer 1 for yield, inevitably leading to confusion about the significance of layer 2's existence.

If the LSD protocol on layer 2 can directly undertake the possibility of obtaining stable yields from native assets on layer 2, platforms like Metis not only gain self-sustaining capabilities but also, with the interoperability between layer 2s, more liquidity from other layer 2 platforms will flow in. At that time, Enki could implement a TVL points reward mechanism similar to Blast, making it even more logical.

If Blast's action of returning users' staked ETH to the mainnet to participate in Lido's staking is a "institutional" unified asset management behavior, where users cannot choose the final destination of their assets, once the feasibility of staking through layer 2 LSD protocols is established, a large number of "retail investors" will cross between various layer 2 platforms to engage in liquidity overflow management, and the future potential is not to be underestimated.

3. To stimulate the development of Metis ecosystem LSD protocols, Metis has launched the Metis Liquid Staking Blitz (LSB) to accelerate the growth plans of numerous LSD protocols. In addition to Enki Protocol, this will continue to attract the rapid rise of LSD protocols, including Artemis, and the number of LSDs on Metis will increase. Following the development paradigm of Ethereum, after LSD, the Restaking mechanism will inevitably emerge at some point, further driving the refined management and practical application of liquidity on layer 2.

On Ethereum, the emergence of Staking protocols like LIDO, RockX, and SSV has raised the staking rate of ETH on layer 1 to 38%. What kind of imaginative space will LSD protocols like Enki Protocol bring to Metis?

Of course, the goals of Staking + Restaking are to lock in greater liquidity, and Metis's advantages lie in:

1. The bidirectional demand positive flywheel of Sequencer Miners + LSD protocols will form a mature foundation for Staking on Metis. Just as Eigenlayer's fundamentals are about delivering Ethereum mainnet security consensus capabilities to emerging layer 2 chains, the value of Staking must ultimately be realized to be robust;

2. Metis has built a decentralized economy specifically for the METIS native Token, which differs from other traditional layer 2 models that use Tokens as governance tokens, continuously demonstrating self-sustaining capabilities during the ecological construction process. If the layer 2 Token only remains in the stages of attracting new users and governance, its purely incentive-based Tokenomics will struggle to effectively empower Token Holders.

At this point, everyone should sense that Metis is taking the lead in establishing a layer 2 native LSD Staking and future ReStaking platform, which actually harbors ambition.

While many layer 2s are opening and sharing "modular" technology components to expand territory with Rollup As A Service, Metis has constructed a set of Rollup Ecosystem As A Service components for ecological liquidity sharing, attempting to deliver a decentralized economy of a native token + native LSD as a "modular" product.

Note: Keep an eye on the development of the LSD protocol ecosystem focused on Metis, as this is the cornerstone for the subsequent growth of the Metis ecosystem and a key factor in determining whether #METIS will usher in a second wave of value growth.