The SEC and Gary Gensler is clamping Down on cryptocurrency staking this is Going to have huge ramifications across The space this threatens the entire Centralized staking model and could have Downstream effects in crypto for example The stifling of innovation in the US and The moving of such exchanges offshore to Other countries which Embrace crypto This is just one of the many moves that Gary Gensler and the SEC have taken Against cryptocurrency and it certainly Is shaky times ahead for cryptocurrency Holders however there is one narrative Amongst all of this mess that is coming To light that I want to discuss with you Guys today and of course that is the Liquid staking derivatives narrative Which could potentially be one of the Strongest performers in the market over The next few months and Beyond as we Move into a new regulatory future and we Also move towards the ethereum Shanghai Upgrade which is a very exciting upgrade So let's get straight into it The first thing I need to discuss before I talk about lsds and the Shanghai Upgrade specifically is the current Regulatory state of the US and of course All this SEC staking news came off the Back of Brian Armstrong the CEO and Founder of coinbase putting out a tweet Which states where hearing rumors that The SEC would like to get rid of crypto
Staking in the US for retail customers I Hope that's not the case as I believe it Would be a terrible path for the us if That was allowed to happen and then we Started getting other inside information That Gary Gensler is attempting to Embark on a midnight Massacre which is Essentially him and the SEC trying to Bring crypto under their control so in The coming weeks the SEC New York and The US OCC will be bringing a myriad of Enforcement actions against exchanges And Banks and the first one of those Actions we saw was an official Sanctioning of the crypto exchange Kraken in the USA for the unregistered Offer and sale of Securities through its Staking as a service program gensless Said whether it's through staking as a Service lending or other means crypto Intermediaries must provide the proper Disclosures and Safeguard required by Our laws so essentially what this did Was ban staking of ethereum on Kraken Through the Kraken exchange and the Scary thing is this could potentially Result in this same precedent being set For a lot of other crypto exchanges for Example coinbase which is one of the Biggest stakers of ethereum and Rand Said by attacking the centralized Players in the US the SEC is forcing Retail Americans to learn how to use Defy they don't see it yet but they are
Forcing real crypto adoption and I would Agree because this attack is on the Centralized players this isn't an attack On decentralization which is why crypto Exists in the first place and that's why There are going to be some major Beneficiaries from all this in the Decentralized realm for example lsds Which could see a new influx of Liquidity into the ecosystem as a lot of Regulations start to slap these Centralized players I did a tweet on This yesterday I said if the SEC Continues to crack down on staking among Centralized exchangers where is that Liquidity going to flow well liquid Staking because the upcoming Shanghai Upgrade although that was already a Strong Catalyst for lsds to run I think The regulatory flood is even more of a Reason to keep your eye on liquid Staking derivatives and this is my Thesis behind why that's the case right Now coinbase and Kraken account for 20 Of all staked ethereum so all the Ethereum staked in the world currently Goes through coinbase and Kraken because They have a staking program you can give Your ethereum to coinbase coinbase on Your behalf Stakes your ethereum for you But all liquid staking providers so the Decentralized version of what coinbase And Kraken offer account for 33 of the Total amount of staked ethereum so this
Means that the liquid staking Derivatives Market can grow by around 60 Even if the total demand for staking Stays flat and I'll explain why this is The case this is because with the Centralized players staking functions Being taken down what this means is that People will need somewhere had to put That ethereum that they were steady and Kraken and potentially coinbase if it Reaches the same fate as Kraken they're Going to need places to stake that Ethereum so what we could very well see Is an outflow out of centralized parties And an inflow into decentralized parties Which offers similar services and liquid Staking is one way that you can still Earn yield on your ethereum in a D5 Sense whilst keeping your ethereum Liquid and that is why if we calculate This based on the fact that there will Be no increase in demand for staking Just if coinbase and Kraken shut down Their liquid staking departments and all That liquidity flows into defy then the LSD protocols will see an increase by 60 In terms of the ethereum staked on their Networks which means obviously more fees For these protocols and that is clearly A bullish Catalyst because Ryan are Coinbase specifically holds one million Ethereum now that at the time of Recording is roughly one and a half Billion dollars worth of ethereum that
Is going to need a new home if the SEC Continues to sanction we saw Kraken up And first coinbase could very well be Next and then we could see more Centralized exchanges as well come under The same fate which will result in an Increased interest in decentralized Options so I want to get into what those Options are and how you can actually Play this game and this anticipated Market shift and also talk about the Shanghai upgrade which is going to be a Major Catalyst for lsds as well but Before we get into that I want to remind You that okx currently has a 10 000 Mystery Box what this means is that if You sign up for a new okx account using The link in the description then you get To open a mystery box which can be worth Up to ten thousand dollars now you could Get five dollars you could get a Thousand dollars you could get five Thousand dollars or even ten thousand Dollars but if you sign up for an Account you will get to open a mystery Box so it's a lot of fun and if you want To try a lock then there's a link in the Description to sign up for an okx Account it's a great exchange and of Course have fun opening that mystery box I wish you all the best of luck I hope One of you wins that ten thousand Dollars to frame the LSD 9 if what we Have to understand is the current
Roadmap that ethereum is on so ethereum Being a broken network with a lot of Congestion and a lot of issues is Currently conducting a five-step process To become a better Network as a whole Now the first step that they needed to Kick off this process was something Called the merge which was ethereum Officially switching from a proof of Work mechanism to a proof-of-stake Mechanism and a proof of stake mechanism It obviously allows staking for you to Earn yields on your ethereum but it also Reduces significantly the environmental Impact of the ethereum network by more Than 99 in the long run this will also Open up the door to reduce gas fees via Future upgrades called The Surge Verge Purge and Splurge but to get ready for These upgrades there's a very important Upgrade that needs to happen called the Shanghai upgrade and what the Shanghai Upgrade will do is finally allow Redemptions for staked ethereum on the Beacon chain now let me explain exactly What this means ethereum core developers Have opted to prioritize the enabling of Staking withdrawals via the Shanghai Upgrade before implementing The Surge Related ethereum Improvement proposal The Shanghai upgrade will enable Withdrawals for each stakers and Validators from the beacon chain among Other things so before if you staked
Ethereum onto the ethereum network you Couldn't redeem it so you were kind of Locked into staking your coins because There was no Redemption mechanism on the Beacon chain to get your ethereum back Now with this Shanghai upgrade you will Be able to redeem ethereum that you Stake and the thesis here is more people Are going to stake ethereum because now It's much more enticing to do so now That you can actually redeem your Ethereum this will incentivize many more Players that were sitting on the Sidelines to actually go ahead and stake Their ethereum and I anticipate the Total percentage of ethereum being Staked is going to significantly Increase as a result of the Shanghai Upgrade and the reason why it's bullish For liquid staking protocols is because Those protocols offer a very good Solution to be a able to stake your Ethereum as opposed to staking through a Validator which is costly and where you Don't get the benefit of having a liquid Token that you can trade with interact With defy with and treat as a normal Ethereum token so the developers expect The Shanghai upgrade to go live around March it could easily be delayed to Something like April but we know it's Happening at the end of q1 this year and I believe in the run-up in tandem with What we're currently seeing from
Coinbase and Kraken and all that Regulatory SEC fund it's going to be a Very strong narrative that continues to Develop and the ethereum foundation did Have their test net process which was Completed for the Shanghai upgrade which Tested the eve staking withdrawals now What exactly is liquid staking well Liquid staking is a way for you to stake Your ethereum tokens capture the upside To the percentage yield that you earn on Staking those tokens whilst being able To keep your ethereum liquid so if you Go into a liquid staking protocol like Lido and you deposit one ethereum in Exchange for depositing one ethereum Into a staking Vault you receive once Staked ethereum back and that state Ethereum is a liquid ethereum so you can Do whatever you want with it you can go Into a borrowing and lending protocol And borrow against it Um you can use that to stake in a pool To earn more yield it basically frees up Your ethereum token that would otherwise Have to be locked in a validator if you Were going to ethereum directly so these Liquid staking protocols offer a new World of capital efficiency for people That want to have Capital efficient eth Whilst benefiting from the yield and That is exactly why I think with more People staking ethereum they're going to Choose liquid staking protocols over eth
Directly and of course now with the new SEC constraints people that were Previously going to go towards Centralized options are now going to Have to look for decentralized options So let me go through some of my top Picks now you better understand the Thesis that I think could perform quite Strongly in q1 this year before we get Into those picks I want to remind you You can swap any of these tokens on Kyber swap kyber swap is a decentralized Exchange that allows you to swap on any Chain you would like so ethereum BNB Arbitrim Solana Avalanche and she can Swap across all of those chains and it Will automatically root the best price For you so if you want to swap ethereum To the graph for example it will Automatically find the best route for Example here it's doing some through Sushi Swap and uni swap to give you the Best possible price and you can do this Across any network so basically if you Want to swap anything on a decks instead Of hunting for where a token is on uni Swab or quick swap just come with the Kyber swap put in the tokens and it will Automatically give you the best possible Price it is honestly such a great Experience to use and thank you so much For cyber swap for sponsoring the show You've really built a cool product here Let's get into my first liquid staking
Pick now the first one is Lido Lido is An obvious one because this is the Biggest liquid staking protocol with the Most amount of deposits Lido currently Accounts for 75.7 of total eth2 liquid Staking balances and amongst all the Liquid staking players it is by far the Biggest now Lido allows you to stake Your ethereum Solana polygon polkadot And kusama but if course in the context Of this video I'm most interested in the Ethereum staking because that is the Token that's directly affected by the Shanghai upgrade and also will be Heavily affected by potential regulatory News as ethereum could potentially be Labeled as security and that could have Effects on how the token is regulated Among centralized exchanges as well and Will of course make staking very Difficult if not impossible on those Exchanges so I do like Lido very much I Think it's one of the best platforms I Think they're set to capture a lot of The Upside from this industry and as a Token I think this could be a solid Investment of course you want to do your Own research and I have been talking About this token for quite some time Accumulating for quite some time but Anytime you get pullbacks maybe just Consider putting a little bit into Lido Of course do your own research but there Is other players in this space as well
That I really like and I want to go Through some of those players right now The next one is Frac share now frax is Very unique because it's not solely a Liquid staking protocol they've pivoted Into liquid staking and they've started Offering it as a service but they're Also a diversified stablecoin D5 Ecosystem which has close relation to The curved convex ecosystem Crux is the Protocol that I really like and it's ran By Sam kaseman who is a figure I respect In the industry um he's very very smart And so is the team over at frax who Continuously ship new Innovative D5 Products now the really interesting Thing about frax from a liquid staking Perspective is the percentage growth That we have seen from the protocol so Basically it was non-existent um in Terms of the amount of ethereum being Staked for many many many months and now We're starting to see frax is now Accounting for over one percent of total Stake teeth but we go back to July and September and October and we can see That frax accounted for almost zero Percent of the total amount of Eve Deposits now it's over one percent so Just the percentage growth here I think Makes frax a decent upside play in terms Of capturing the upside of liquid Staking derivatives prax has been Growing at a very fast pace and this is
One of the reasons why I'm bullish on Frax because they've been able to Increase their frax ease Supply quicker Than any other protocol and you're Betting on frax pretty early on in its Liquid staking Journey honestly very Impressive to see not only the Validators increase but also the total Eats supplier increase and over the last 30 days we've seen a 78.3 percent change In the total amount of frax eat steak so That is really good signs for the frax Network the third one I want to look at Is rocket pool Now Rocket pool is Similar to Lido in the sense that it is A liquid staking protocol focused on Ethereum it has performed very well over The last few days as a response to the SEC news and is a place that allows you To stake and run a node or simply stake Your ethereum you can deposit as little As 0.01 ethereum and receive the r e Liquid staking token similar to if you Deposit on Lido you received the staked Ethereum token now rockapool has also Exhibited very strong growth and has Been gaining market share we see that The total amount of eth is now over 220 000 and just to give you perspective Compared to the rest of the market this Can compares to coinbase at 1 million And lighter at 4.8 million so rockapool Takes up 3.4 of the total market and Definitely could be a beneficiary when
Coinbase and kraken's liquidity siphons Off into some of these other liquid Staking protocols and off the back of That I think a fourth one to keep a Close eye on is Anchor Network which is Also another liquid staking platform you Can go into their website click stake Now they have 159 million dollars Deposited and they offer four percent on Staked ethereum now their yield is Actually very good compared to some of The other liquid staking platforms with A nine percent apy compared to frax Lido And stakewise who come in around the Five to seven percent Mark so this could Be an enticing factor for why people Pick the anchor Network for staking Their ethereum so this is definitely one To keep my eye on but if I had to tell You my favorite I've got to go with Lido And fraxia with rockapool as a close Third so in the order that I listed them Just based on where I think liquidity is Most likely to flow and also potential Upside so that is my liquid staking Derivatives narrative but there's also Another the opportunity that I have for You and that is the current Rolex Giveaway that we are running on crypto Banter so if you sign up for a link to Either bitget or buy bit using the links In the description you can enter a Competition to potentially win a 25 000 Rolex every single trade that you
Place equals one entry this means if you Do a hundred trades you have a 100 times Chance of winning a Rolex then you do Compared to someone that only opened one Trade so if you use a crypto banter link To bitget or buy bit and of course There's links in the description to both Of those exchanges and you open one Trade you get an entry so some people Are getting thousands of entries because They're trading and trading trading this Means you can trade with any amount you Can do five dollar trades ten dollar Trades whatever it takes um to get more Entries that could potentially be a Strategy for you to win this Rolex but You only have a couple weeks and we're Only running this till the end of February so if you are watching this Video during February get involved using The links in the description and Potentially win yourself a Rolex and of Course buy bit also has a 30 sign up Bonus when you deposit and bitget has an Eight thousand dollar sign up bonus when You deposit as well if you enjoyed this Video make sure you smash the Subscribe Button for future content on cryptobanta Hit those notifications as well so you Stay up to date with future uploads and Let me know in the comments what do you Think of these picks is there anything That I missed out are there any projects That you like in this narrative that I
Didn't touch on and maybe in the future I'll do a video on some of those Protocols for you guys but until next Time good luck in the market and I hope You have a lovely day peace out guys Foreign
