STAKED ETHER TOKEN GETS SUDDEN BLAST IN THE CRYPTO INDUSTRY
The main metrics are a discount between the fixed ether price (stETH) - a token from the Lido Finance protocol that should be traded at a price close to ether (ETH), the traditional Ethereum blockchain cryptocurrency - and the ether value. itself.
The discount reached a record 8% on Monday, according to Dune Analytics data.
The speculation, according to analysts, is that crypto market makers and lenders may be forced to abandon their hold on stETH tokens to support withdrawals and meet margin calls.
The ether stake was introduced by the decentralized-finance (DeFi) platform Lido Finance as a way to provide funding for traders who “squeeze” their ether into Ethereum’s Beacon Chain. It is all part of the process by which Ethereum switches to the "proof-of-stake" blockchain. Without going into all the details, the participants in the system should commit to closing their tokens for a period of time to help process the transaction; in return they receive crypto rewards. But for now, they can take stETH tokens and continue trading.
Lido dominates the Ethereum staking ecosystem, about one-third of all ether deposits involved. In May, Goldman Sachs wrote that such a loss of deposit could "psychologically increase systemic risk" due to Lido's interactions with crypto markets.
Disposing of the main owners
Celsius, a crypto lender that has been under consideration since last weekend's withdrawal, citing "worst market conditions," holds 409,260 stETH tokens, valued at about $ 470 million at current prices, according to data provided to Ape Board, i -portfolio tracker from Nansen blockchain analysis firm.
Johnny Louey and Andy Hoo, analysts at the Huobi Research Institute, the research arm of the Huobi crypto exchange, wrote in a paper Tuesday that Celsius had lost nearly $ 71 million earlier in holding stETH at Stakehound because Stakehound had lost keys.
Concerned Celsius users started a quick wave of rescue at a cost of nearly 50,000 ETH per week, he added, and the stadium was demanding money.
"What Celsius can do is sell its stETH to buy ETH in the market to satisfy customer requests," Noelle Acheson, head of market information at crypto market maker Genesis, told CoinDesk. (Genesis and CoinDesk are both owned by Digital Currency Group.)
The STETH discount first opened last month, when the crypto markets were shaken by the collapse of the Terra blockchain network and its stablecoin UST. Since then, stETH traded heavily for a 2-3% discount, with a spike to 5% on May 12 when UST fell into the death trap.
StETH market revenue dropped to $ 4 billion from about $ 10 billion in early May, driven by owners fleeing stalking platforms as the ether price crash.
Three Arrows Capital, a Singapore-based trading and investment company that was one of the largest investors in the Terra blockchain, withdrew nearly $ 400 million from stETH and ETH in the Curve protocol in May, Andrew Thurman, a Nansen analyst, told CoinDesk.
Three Arrows Capital, often abbreviated as 3AC, "has attracted the attention of the chain community in recent weeks on how they have handled their stETH position," said Thurman.
Data from Nansen show that the 3AC fund withdrew 80,000 stETH from the Aave agreement on Tuesday and converted 38,900 stETH (another $ 45 million) into two jobs with a discounted price of 5.6-5.9% ether .
That came after rumors on crypto Twitter that the investment company could face financial problems.
Representatives of 3AC did not immediately respond to requests for comment.
Last week, another big-name trading company, Alameda - closely linked to Sam Bankman-Fried, founder and CEO of crypto exchange FTX - lost 50,615 stETH, valued at about $ 88 million at the time, according to of a tweet from Hsaka, a. a famous crypto merchant.
Another reason for the discount was the lack of ether in the pole, Acheson said.
Investors are fleeing risky assets such as cryptocurrensets as financial markets around the world decline in response to large banks raising interest rates to combat inflation. That is pressing crypto forums to meet customer releases. At the same time, investors are now choosing to seize more liquid assets.
The daily trading volume of stETH is hundreds of thousands of dollars, compared to the daily volume of ETH in the billions, making the price of small liquid goods more sensitive to market pressure. If a major player needs to sell his holdings, he can get fewer buyers, lowering the stETH value.
"In the short term, stETH will face significant marketing pressure," concludes a report by the Huobi Research Institute.