dSHD goes live with Alexandria Upgrade: What does it mean? 

On June 18th, as part of the massive Alexandria upgrade, get ready for dSHD. 

We know the community has been waiting to experience the possibilities of a liquid staked SHD for some time — and that moment is finally here!

What does this mean for you and for the long-term future of the protocol? In this blog, we will explore some of the major implications. 

Before we get there though, a quick definition of dSHD (if you already understand the concept, feel free to jump ahead to the rest of the article) 

• SHD token is the governance and utility token for Shade Protocol. As governance goes live, this means the opportunity to shape the future of Shade. In a more general sense, the token reflects a sense of optimism in the current and future state of Shade’s interconnected dApps and it’s balance sheet of protocol owned liquidity. 

• Staking SHD is the chance to earn real yield APR from fees generated by the protocol. Staking APR is variable week-to-week, and is the result of SHD buybacks performed using fees accumulated throughout the reward period. That SHD is then distributed to SHD stakers. This is yield is based on real activity, and is referred to as “real yield” as opposed to inflationary token emissions (e.g. the “money printer” caricature fits here). 

• Staked SHD is subject to 7 days of unbonding (and is illiquid as a result). But the staked SHD that becomes dSHD is no longer illiquid. dSHD is earning real yield and is liquid, meaning it can fully participate in DeFi.   

With those distinctions clarified, let’s jump into three reasons dSHD is a big deal…  

1//$1M in liquidity unleashed into DeFi 

56% of SHD’s circulating supply is staked. Even with current market conditions, that’s ~$5.5M. dSHD will have a (still undetermined) minting cap though. For a rough example, a cap of 25% would mean ~$1.4M SHD can be unleashed into Shade DeFi. Are you ready? 

Shade Protocol has always believed in the power of liquid staking derivatives. More than that, we’ve been a partner to LSD providers like Stride, QuickSilver and Persistence. 

The reason is simple: LSDs are a more efficient use of ecosystem liquidity. They unlock liquidity that would otherwise be dormant and unusable. 

With the launch of dSHD, this liquidity is no longer dormant. 

2//New Liquidity Pools 

We expect that some of this new liquidity may find its way to LP opportunities. This is great for users and great for the protocol. Shade needs strong liquidity with key trading pairs to facilitate the rush of interest we know dSHD will bring.

If you’re interested in a dSHD/USDC or dSHD/SHD pair - be ready for those initial pools.

While we are at it, you might be wondering why a limited percentage of staked SHD is eligible to become dSHD. The headline is: security. We can go deeper with that in future content. But for now, imagine some of the issues that surface if all staked SHD becomes dSHD… This introduces risks that aren’t in the best interest of the token or the health of the protocol. 

3//dSHD Secures the Protocol’s Future 

This might sound more abstract, so let’s explain.  

Because dSHD is natively enshrined - an LSD native to the protocol - it protects Shade from a potential black swan attack vector. 

When a LSD launches, the value proposition is such that users willingly relinquish their governance capacity to the staking provider in exchange for the properties of the LSD. 

The question that can’t be overlooked though is simple, “Where does the governance power go?” Over time, successful LSD providers have the potential to accumulate significant governance power. 

The next logical question is, “How aligned is the LSD provider with the protocol?” In a worst-case-scenario, a provider could hijack a protocol. 

Shade side-steps this outlying risk by eliminating the categories because the protocol is issuing the LSD. 

What’s Next? 

Like you, we’re excited for the launch of dSHD alongside of all the other features that Alexandria brings to the app. 

If you aren’t already following Shade Protocol on X make sure to do that so you can keep pace with all the latest information. 

Shade Protocol is the super app for private DeFi and it just keeps getting better. Thanks for being a part of this journey!  

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Information provided in this post is for general informational purposes only and does not constitute formal investment advice. Please read the full disclaimer at shadeprotocol.io/disclaimer before relying on any information herein.