⚔️The Stake Wars

Protocols battle over liquidity as a scarce resource

The amount of available liquidity for an LST/LRT is directly correlated to their market size. More liquidity is a significant signal, as there's more immediate exit capacity available, reducing risk. Building up sufficient liquidity as a new LST or LRT, or even maintaining your existing position in the liquidity market, is challenging and costly.

With lpETH, bootstrapping your own pools is a thing of the past. Protocols giving better bribes can receive lower fees or interest rates for their users versus their competitors. New LSTs/LRTs can tap into available liquidity without bootstrapping their own pools and bribe their way to success.

Equally, protocols could acquire their own governance tokens to vote on their fee gauges while remaining long-term aligned with the pool. Ultimately, the amount of liquidity that can exist to service the LST/LRT market is finite. Protocols will have to find the most optimal ways to most efficiently provide liquidity for their user base, lpETH simplifies that.