Liquid Staked Derivatives (LSDs) Fair Pricing

In this section we explain in methodology behind LSDs fair valuation
The usual structure for calculating fair price of Liquid Staked Derivative (LSD) is as follows:
LSDfairprice=BaseAssetPrice∗(LockedBaseAssset/IssuedLSD)LSD fair price = BaseAssetPrice *(LockedBaseAssset/IssuedLSD)
The main components of the formula are:
  1. 1.
    BaseAssetPrice - price of the non-staked asset which is locked against LSD (e.g. for stETH, ETH acts as a base asset)
  2. 2.
    LockedBaseAsset - number of base assets locked in the LSD smart contract (e.g. for stETH, quantity of ETH locked in stETH smart contract)
  3. 3.
    IssuedLSD - amount of LSD tokens issued (e.g. for stETH, total supply of stETH represents it)
This is the standard methodology and the data is queried directly from the Smart Contract of the LSD issuer. It allows sudden devaluation in case malicious actor manages to mint a large amount of LSD tokens and ensures that the issuer is keeping the funds safe.
Depending on the contract type we apply the following logic for valuation:
  • If the assets can be redeemed 1:1 (e.g. stETH), price will always be the same as the base asset, even though the collateralization rate is higher (if collateralization ratio is lower, the price will be adjusted to negative side)
  • If the LSD asset increases in value against the base asset because rewards are not paid out directly but rather represent a share of the total pool, the pricing will be dynamic depending on the reewards accrued in the pool (e.g. rETH)
These are the standard methodologies applied to the feeds but some assets might require custom methodologies. To request an integration of custom asset, visit the following page for more information:
You can find all integrated LSD assets on DIA's app: