Will Lido Staked Ethereum (stETH) Have A Similar Drop Like TerraUSD? – Coinpedia – Fintech and cryptocurrency news media

In the last 24 hours, Lido Staked Ethereum (stETH), a currency representing the stacked Ethereum on Defi platform Lido, has crashed dramatically. At $1,646, stETH is down about 5% over the past 24 hours.

It is expected to trade 1:1 with Ethereum, which is currently trading at $1,771.43. The token can be exchanged for ETH on Lido.

According to crypto researcher @SmallCapScience, the token’s depegging is due to a huge imbalance in a Curve Finance liquidity pool. The pool imbalance is expected to worsen, leading to further stETH losses.

I’m researching several topics for our new episode of @marketcapping today and one is very important to me. $stETH / $ETH Peg is in rough shape and liquidity is running out fast.

I’m putting my thoughts together to draw more eyes to it… 🧵

— Small Cap Scientist 👨‍🔬🧪🥼 (@SmallCapScience) June 10, 2022

The $1.5 billion dump

This was made worse by Alameda, a major crypto trader and one of the major holders of stETH, which sold all of its assets for $1.5 billion. This could trigger a major bank run and send prices down, similar to Terra.

Alameda was one of the top seven holders of the Defi token. Their $1.5 billion payout, made primarily through swaps on Curve Finance, has the potential to spark a major bank run.

Several parties involved in the LUNA disaster, including venture investors Jump, Three Arrows, and Andreessen Horowitz, are also major holders of stETH.

The sale of other significant holders, most notably by Curve, could further exacerbate the imbalance in stETH liquidity pools and lower the token’s value.

As a result, exchanging the token for ETH would be costly, especially for platforms that have invested consumer funds in stETH. This could lead to a bank run, with stETH depreciating as much as TerraUSD.

Celsius Network Freezes Redemption?

Defi platform Celsius holds a $1.5 billion stake in stETH and owes its customers around $1.2 billion, according to @SmallCapScience.

Celsius will not be able to honor customer paybacks if stETH continues to fall. The data shows that Celsius has regularly lost liquid funds due to hacks, exploits and the Terra crash, which aggravates the situation.

With investors looking to redeem their positions at a rate of around 50,000 ETH per week, the company will likely end redemptions soon.

Was this letter helpful?

Learn Crypto Trading, Yield Farms, Income strategies and more at CrytoAnswers
https://nov.link/cryptoanswers