Liquid Staking Derivatives and Real World Assets on Lendle

The integration of these asset classes will further improve Lendle’s infrastructure.
3 min readSep 15, 2023

In previous articles, we’ve ventured into the fundamental applications of lending, the role of Lendle within Mantle Network’s DeFi ecosystem, as well as future partnerships and integrations. Now, it’s time to dive deeper into Lendle’s capabilities, particularly in the future integration of real-world assets and liquid staking tokens. Moreover, we’ll address the misconception that DeFi simply recirculates existing funds and emphasize the true value being generated across various chains and ecosystems.

Liquid Staking Tokens and Real Value.

Critics often argue that DeFi fails to attract new money and mainly revolves around recycling existing funds. However, this perspective overlooks the value being generated across chains, layer 1s, and layer 2s. Mantle Network, for instance, has formed a partnership with Lido Finance to introduce liquid staking derivatives to its ecosystem. When Mantle Network stakes its Ethereum via Lido, it generates real yield through ETH, which is obtained by providing consensus for Ethereum’s proof-of-stake mechanism.

This yield is not arbitrary; it originates from the gas fees paid by individuals and entities utilizing the Ethereum mainnet. These fees represent real value since they demonstrate a willingness to pay for a product or service. While node operators are rewarded with gas fees, the ETH generated by Mantle Network via Lido can be used to incentivize protocols and entities within Mantle Network’s ecosystem.

Having exemplified how real yield is being created, at this point we should reiterate that Lendle aims to integrate liquid staking tokens and derivatives as collateral assets, with Lido-staked ETH being a reliable and secure blue-chip asset. Needless to say, this will further increase the liquidity layer that we provide on the network!

Bridging Traditional and Crypto Assets

While the DeFi ecosystem generates internal yield through liquid staking derivatives and tokens, it remains a niche market compared to the traditional financial sector. To bridge this gap and enable Lendle users to access traditional assets, the integration of real-world assets becomes essential. Real-world assets refer to tangible assets represented on-chain, such as bonds, stocks, real estate, and rare metals. As mentioned in a previous article, Lendle is also working on partnerships to ensure real world assets are onboarded on our platform.

In fact, collaborations with entities like Kuma are already underway to tokenize these real-world assets and make them collateral on Lendle. By bringing tokenized bonds onto Lendle, users will be able to leverage their existing yield potential. For example, tokenized bonds may already offer a 3.5% or 4% yield. When supplied as collateral on Lendle, borrowers will be able to further enhance their yield, making the real-world yield case even more enticing. Additionally, the combination of real-world yield with Lendle’s supply APY and borrowing strategies presents exciting opportunities for structured products.

In sum: DeFi is more than an isolated niche.

Contrary to claims that DeFi merely recycles existing funds, in this article we have argued that DeFi actively creates value across diverse chains and ecosystems. In fact, through partnerships like that with Lido Finance, Mantle Network taps into the yield generated by staking Ethereum. Simultaneously, the integration of real-world assets into Lendle will bolster Mantle Network’s ecosystem’s liquidity layer and expands the potential for enhanced yields and structured financial products.
Lendle stands at the forefront of innovative and sophisticated financial strategies, solidifying its role as a liquidity lending infrastructure within the Mantle Network. This not only advances DeFi but propels it toward new heights of liquidity and value creation.