Vector - First Mover Primitive Liquidity Position Derivatives

Jan 23, 2024

$PENDLE led the LSD wave +1500%

$RSTK is the first LRT protocol on Eigen +730%

Here’s why LPD is an easy 50x first mover primitive 🧵👇

LPDs are a novel asset class that will be the focus in 2024.

Because it captures the full LST & LRT markets in a low-risk, diversified way that can offer higher returns than the underlying assets.

If LSD is already at a market size of $35B, LRT itself would be huge, and LPD would see exponential potential many times that of LSD.

LPDs are achieved through the @vectorreserve Superfluid staking mechanism.

$VEC being the first mover for this primitive will gain a lot of market share.

We have seen from previous cases that first movers such as $PENDLE, $MUBI, $RSTK, $LBR gaining a lot of market share.

I am all geared up for its IDO launch!

@vectorreserve is focused on redefining the concept of reserve currency through the optimization of liquid staking and re-staking yields.

Its foundation is built on $ETH and its derivatives, such as LST and LRT, aiming to create a diversified treasury.

vETH is the Liquidity Position Derivative which, can be thought of as an index of ETH denominated LPs against LSTs and LRTs.

There are 3 kinds of yields that LPD users earn by holding $vETH;

Passive Yields: Vector Reserve’s LPs and treasury consisting of LST and LRTs would generate yield for vETH holders
Trading Fees and Emissions: vETH holders earn fees as people provide liquidity, trade and from emissions.
Superfluid Staking: vETH amplifies staking yields through the restaking of ETH LPs

For users looking for a more diversified risk profile, LPDs serve that need as exposure is distributed across carious DeFi activities.

Similar to how structured products like Indexes would work.

Superfluid Staking

What we already know about restaking is that you can restake native ETH or LSDs in EigenLayer.

Here is where Superfluid Staking differs:

Liquidity Position tokens represent a mixed pool of assets like Indexes.
Participants stake these Liquidity Position (LP) tokens
These LP tokens represent a share of the total liquidity in a DeFi exchange, such as Uniswap or Curve.
Superfluid Staking works be restaking the underlying LP positions backing vETH via EigenLayer.

An example to help you visualize how users can earn LRT points and yield at the same time:

Take @staderlabs $ETHx and @KelpDAO $rsETH for instance
Users can pair ETHx/ETH or rsETH/ETH in an LP and have it deposited on any DEX.
Through Superfluid Staking This can then be restaked on Eigenlayer to accrue points and yield.
Users also earn Kelp Miles (from Kelp), and the underlying yield from the LP, as well as gauge emissions in future.