10 Best LSDfi Projects – To Maximize ETH Yield In 2025

In this article , I will focus on the Best LSDfi Projects that are changing the landscape of DeFi with liquid staking innovations.

These protocols provide users with opportunities to derive yields, unlock liquidity, and optimize capital efficiency without the need to lock up their ETH.

From minting stablecoins to advanced restaking methods, these projects are defining what decentralized finance will look like in the Ethereum ecosystem.

Key Points & Best LSDfi Projects List

LSDfi Project	Key Points
Pendle Finance	Tokenizes yield, enabling fixed yield trading on LSD assets like stETH, rETH.
Lybra Finance	Issues eUSD, a stablecoin backed by LSDs, offering yield-bearing stability.
Gravita Protocol	Borrow GRAI stablecoin against LSDs like wstETH with zero interest.
Origin Ether (OETH)	Auto-compounds LSD yields into one liquid, interest-bearing token.
Ether.fi	Non-custodial liquid staking platform that boosts DeFi yield opportunities.
UnshETH	Enables diversified LSD exposure through a basket of LSDs.
Instadapp Lite	Simplifies leveraged LSD yield farming with automation and risk management.
Raft	Mint R stablecoin using LSDs, optimized for capital efficiency.
Kelp DAO	Restakes ETH LSDs for extra rewards via EigenLayer integrations.
Sommelier	Active yield strategies for LSD assets via vaults managed by off-chain logic.

10 Best LSDfi Projects

1.Pendle Finance

Considered one of the best projects in the field of Liquid Staking Derivatives Finance (LSDfi), Pendle Finance is transforming the future of DeFi with the ability to trade future yield.

Users can now separate assets that generate yield such as stETH and rETH into two constituents: the principal and the yield.

This creates a novel DeFi primitive where users can speculate, hedge, lock, or even fix returns on future yield. Farm and risk management achieved near seamless Pendle integration with leading LSDs due to its innovative yield tokenization and decentralized finance platform.

Pendle remains the easiest to use in the space and with an expanding ecosystem, stands out in LSDfi ranking.

Feature	Description
Yield Tokenization	Splits assets into principal (OT) and yield (YT) components.
Fixed Yield Trading	Allows users to lock in guaranteed yields via PT (Principal Tokens).
LSD Integration	Supports LSDs like stETH, rETH, and wstETH.
Pendle AMM	Custom AMM for trading yield-bearing assets.
DeFi Composability	Deep integration with protocols like Aave, Lido, and EigenLayer.

2.Lybra Finance

Lybra Finance is one of the leaders in LSDfi having its own LSD stablecoin, eUSD, which provides stability in the liquid staking ecosystem. Lybra Finance eUSD is a overcollateralized stablecoin which is backed by LSD assets such as stETH and earns yield passively for its holders.

Users are able to mint eUSD with the help of LSDs, which provides liquidity while maintaining the ability to earn staking rewards. No other entity in the DeFi space offers such great combination of yield and stability that Lybra does.

Offering unmatched solutions for users that wish to maximize or optimize their staking rewards within a stable and secure ecosystem puts Lybra Finance ahead of its competitors. Lybra Finance has great focus on sustainability, decentralization and capital efficiency.

Feature	Description
eUSD Stablecoin	Overcollateralized stablecoin backed by LSDs like stETH.
Passive Yield	eUSD holders earn yield passively from LSD backing.
Zero Interest Loans	Borrow eUSD without ongoing interest charges.
Dual Utility	Combines yield generation and price stability.
Governance Token (LBR)	Used for protocol governance and staking.

3.Gravita Protocol

Gravita Protocol has emerged as a leading LSDfi solution on Ethereum with the ability to offer interest-free stablecoin loans by minting GRAI against liquid staking assets like wstETH, rETH, WETH, swETH, and bLUSD.

Most impressive on Gravita is the Stability Pool—users deposit GRAI to liquidate underwater positions and in return, receive discounted collateral . Borrowers are subject to a one-time fee which averages between 0.5-0.9%.

This fee is refundable in portions if paid back within six months with no ongoing interest accrual. Gravita’s advanced risk management enables Borrowers to Access Non-Custodial Loans with LTV ratios of 90-99% at Dedaub and Omniscia audited Ethereum firm, maintaining high decentralization standards.

Feature	Description
GRAI Stablecoin	Soft-pegged stablecoin backed by LSDs like wstETH, rETH.
Zero Interest Borrowing	Only one-time mint fee; no ongoing interest.
High LTV (up to 99%)	Extremely capital-efficient borrowing.
Stability Pool	GRAI holders can earn discounted collateral through liquidations.
No Governance Token	Operates without a native token, focusing on protocol simplicity.

4.Origin Ether (OETH)

Origin Ether (OETH) is one of the new improvements to the LSDfi ecosystem that aggregates staked liquid tokens such as stETH, rETH, frxETH, and wETH into one rebasing token that is redeemable 1:1 with ETH.

OETH improves security, decentralization, and risk-adjusted return on investment using SSV-styled DVT with accompanying staking rewards, AMM liquidity provision, and Curve incentives .

OETH’s auto-compounding feature pays out yield daily to holder’s wallets. Dominating the market with over $100M TVL and ample interconnectedness with DeFi protocols EigenLayer, Pendle, Curve, and TAI.money, OETH offers a liquid staking solution that is versatile, efficient, and transparent.

Feature	Description
Rebasing Token	Automatically distributes yield to holders via rebasing.
Diversified LSD Backing	Backed by stETH, rETH, sfrxETH, and wETH.
Auto Compounding	Earns yield from staking, LP fees, and Curve rewards.
Fully Liquid	Can be freely traded or used across DeFi protocols.
Transparent Yield Sources	Users can track yield sources via Origin’s dashboard.

5.Ether.fi

Ether.fi is one of the most advanced restaking protocols that is both liquid and decentralized, allowing users to stake any number of ETHs and receive eETH, a token that restakes automatically.

eETH earns rewards from Ethereum staking, EigenLayer restaking yields, and loyalty incentives from both EigenLayer and Ether.fi points .

It uses Distributed Validator Technology and non-custodial key control (“your keys, your ETH”) which enhances DVT decentralization and counterparty risk.

It has over $8 billion TVL and automation of “Liquid Vaults” that provide advanced yield optimization across DeFi (AAVE, Pendle, Uniswap). Ether.fi offers flexibility and high APYs.

Reddit users comment saying it “leads the liquid staking sector,” controlling billions while enabling vault farming and cross-protocol utility.

Feature	Description
Non-Custodial Staking	Users retain control of keys—“your keys, your ETH.”
eETH Token	Liquid restaking token earning ETH + EigenLayer rewards.
DVT Support	Uses Distributed Validator Technology for decentralization.
Points Incentives	Offers both Ether.fi and EigenLayer points.
Vault Integration	eETH can be used in DeFi vaults for higher leveraged yield.

6.UnshETH

The UnshETH protocol offers a novel approach to LSDfi by providing a liquid-staked ETH (LSDs) collection comprising wstETH, cbETH, rETH, sfrxETH, and others—all wrapped in a single ERC-20 token.

UnshETH automates the accumulation of staking rewards, swap fees, liquidity mining returns in USH, its native token. And omnichain compatibility (Ethereum, BNB, Arbitrum, etc.) is achieved through LayerZero.

With over $30M in TVL, participants benefit from diversified yield generation, low-slippage swapping, and governance using USH and locked vdUSH.

Its description as a yield-optimizing “router” for staked ETH by some Reddit users highlights the growing competition among LSDs and underscores the protocol’s contribution to validator decentralization in incentive architecture design.

Feature	Description
LSD Basket Token	Diversified exposure to multiple LSDs in one token.
Validator Incentivization	Encourages decentralization through validator diversity.
Yield Optimization	Combines staking yield + AMM swap fees + liquidity mining.
vdAMM Mechanism	Novel AMM tailored for LSD trades.
Multichain Deployment	Available on Ethereum, Arbitrum, BNB, and more.

7.Instadapp Lite

Instadapp Lite or Fluid Lite is a simplified version of a vault-based DeFi tool that auto-leverages stETH to amplify staking yields with Aave, Compound, Morpho, and Spark.

Depositors are issued ERC-4626 iTokens which signify their proportionate investment in the vault’s yield share, and earnings are distributed daily.

It reduces the user’s workload by condensing complex multi-protocol strategies into one-click deposit options and streamlining gas fees and overhead costs.

With over $300 million TVL, Vault V2 supports recursive leverage: borrowing ETH against stETH to redeposit to earn more in rewards.

As one Redditor highlighted, depositing 1 ETH translates to almost 9% APR from Lido’s ~5% yield capped with leverage.

Feature	Description
Leverage-as-a-Service	Enables one-click leveraged staking with stETH.
iTokens	ERC-4626 vault tokens representing interest-bearing positions.
Gas Efficient	Aggregates complex strategies into one transaction.
Vault Flexibility	Users can enter or exit leveraged strategies anytime.
Multi-Protocol Support	Integrates Aave, Morpho, Compound, Spark, etc.

8.Raft

Raft is an innovative LSDfi protocol which allows its users to mint the stablecoin “R,” a USD-pegged stablecoin whose only collateral is liquid-staked ETH like stETH and rETH, needing no fiat collateral. Borrowers must possess at least 3000 R and must maintain collateral ratios above 120%.

Raft’s “One-Step Leverage” feature is unique as it lets users access up to 6× (or even 11× in future upgrades) leverage in a single transaction.

With TVL over $55–60 million and growing, Raft emphasizes decentralization – supporting community frontends and governance-lite structures alongside multi-collateral support.

Smart design paired with high capital efficiency and excellent user experience place Raft among the top LSDfi projects in 2025.

Feature	Description
R Stablecoin	Overcollateralized, ETH-backed USD-pegged stablecoin.
LSD-only Collateral	Accepts only stETH and rETH as collateral.
One-Step Leverage	Leverage LSDs up to 6x in a single transaction.
Low Borrowing Threshold	Minimum borrow amount is 3,000 R.
Governance-Lite	Prioritizes decentralization without complex tokenomics.

9.Kelp DAO

Kelp DAO is innovating in the field of LSDfi with liquid restaking token rsETH, which allows users to earn Ethereum staking rewards and EigenLayer yields simultaneously while maintaining liquidity.

Stader Labs developed the DAO and it accepts ETHx, sfrxETH , stETH and order deposits that mint rsETH then used in DeFi.

Minting rsETH allows users to leverage it in DeFi protocols. Users now earn “Kelp Miles” which are similar to EigenLayer points with rewards in the form of tokens expected Kelp now allows staking with double rewards and with rsETH and minting it charges a minimal fee of 10% on ETH rewards.

Feature	Description
rsETH Token	Liquid restaking token backed by LSDs.
Dual Yield	Earn staking rewards + EigenLayer restaking yields.
LSD Compatibility	Accepts stETH, sfrxETH, ETHx, and others.
Kelp Miles Program	Points-based loyalty system with token rewards expected.
Low Fee Structure	Only 10% fee on staking rewards; no lock-ins.

10.Sommelier

Sommelier is a LSDfi and DeFi asset-management protocol innovatively created on an app-chain based on Cosmos.

Its flagship offering, Real Yield ETH vault, an ERC-4626 compliant vault, dynamically reallocates stETH/ETH to various DeFi platforms, eg.

Aave, Curve, and Uniswap V3, optimizing return on investment with leveraged returns and integration at the protocol level.

Off-chain data models implementing validator consensus allow real time market adaptation of the vault, delivering approximately 300% yields on stETH over 90 days.

Sommelier multichain Cellars enable active non-custodial gas-efficient strategy management beyond auto-compounders. One Reddit commenter best described the situation: “automated vaults find best-in-class yields while mitigating risk.”

Feature	Description
Real Yield ETH Vault	Active yield farming vault using stETH and ETH.
Off-Chain Automation	Strategies are updated via off-chain computation with validator approval.
Leverage Optimization	Dynamically adjusts leverage across Curve, Aave, Uniswap.
Cosmos-Based Chain	Uses its own app-chain for strategy governance and execution.
ERC-4626 Compliant	Non-custodial vault tokens that auto-compound rewards.

Conclusion

To sum up, leading LSDfi projects such as Pendle, Lybra, Ether.fi, among others, are changing the DeFi landscape by providing liquidations, increasing yield, and improving overall capital efficiency.

These protocols give innovative methods to earn on staked ETH while allowing for flexibility and a decentralized structure.

With the expansion of the LSDfi ecosystem, these projects stand to significantly impact the broader Ethereum economy.

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