Liquid Staking Tokens in Automated Market Makers
CoRR(2024)
摘要
This paper studies liquid staking tokens (LSTs) on automated market makers
(AMMs), both theoretically and empirically. LSTs are tokenized representations
of staked assets on proof-of-stake blockchains. First, we theoretically model
LST-liquidity on AMMs. This includes categorizing suitable AMM types for LST
liquidity, as well as deriving formulas for the necessary returns from trading
fees to adequately compensate liquidity providers under the particular price
trajectories of LSTs. Two relevant metrics are considered. Firstly, losses
compared to holding the liquidity outside the AMM (loss-versus-holding, or
impermanent loss). Secondly, the relative profitability compared to fully
staking the capital (loss-versus-staking) which is a metric specifically
introduced for the case of LST-liquidity. Subsequently, we empirically measure
these metrics for Ethereum LSTs across the most relevant AMM pools. We find
that, while trading fees often compensate for impermanent loss, fully staking
is more profitable for many pools, putting the sustainability of current LST
allocation to AMMs into question.
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