Lido Staked ETH (stETH) is depegging, is this another disaster?

lixer

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Quote from: someone703 on June 19, 2022, 08:21:57 AM

I've heard about it and learned that the crypto market has had a topsy-turvy week when a flurry of negative news about Celsius and Three Arrows Capital's performance caused a "chain effect" on the market. The market panicked, sending the prices of Bitcoin, Ethereum, and other major altcoins to their 2022 lows. Perhaps these are not the last victims we will see, as the situation is not very good for the market. general economic markets as well as crypto.

Well, this is not new but this is always the case that happens whenever there are set of negative events, it will then impact the market also in a bad way making the prices plunge. It's only sad though that these negative events come when we are still in bear and this had totally worsen the situation. I think that even the experienced ones are now starting to doubt about the credibility of the cryptocurrencies but let's just hope that they will hold on because we still believe that this poor market can recover.

The price of the sETh was still at 0.95 and I think that was still close to 1 eth so people shouldn't panic immediately as what they think can be wrong and it is already said that " 1 sETH is always 1 ETH redeemable after the proof of stake merge" and I think the merge didn't started yet?

dragonvslinux

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The simple reason why StETH has lost it's peg is because there is nothing to maintain it right now, at least not until ETH 2.0 is launched and 1 stETH can be redeemed for 1 ETH. Otherwise the reason for it's decline is from liquidations within DeFi, that of 3AC and others. While it can go a lot lower, "all being well" 1 stETH will still be directly redeemable once 2.0 launches, whenever that might be.

So the main reason for the current decline and de-pegging is those wanting to sell their stETH prior to 2.0 launch and therefore being unable to redeem it for 1 ETH. Once 2.0 launches that peg should theoretically be maintained, as there will be the arbitrage to buy 1 stETH for <1 ETH, and then immediately exchange it for 1 ETH. Until then, there will be can be no guaranteed peg (as there never was one).

So unlike the Luna ponzi-style scheme, I wouldn't say that stETH will collapse, as currently there is opportunity to buy ETH for at a % discount via stETH, as long as you're willing to wait for 2.0 launch.

someone703

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I've heard about it and learned that the crypto market has had a topsy-turvy week when a flurry of negative news about Celsius and Three Arrows Capital's performance caused a "chain effect" on the market. The market panicked, sending the prices of Bitcoin, Ethereum, and other major altcoins to their 2022 lows. Perhaps these are not the last victims we will see, as the situation is not very good for the market. general economic markets as well as crypto.

coco23

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Quote from: hd49728 on June 16, 2022, 06:46:17 AM

Quote from: adaseb on June 12, 2022, 11:56:48 PM

Honestly it’s one surprise after another. With Luna failing who knew we would get another catastrophic even so quickly.

The successful atrack on Luna and UST initiates a new dangerous and deadly trend in crypto. Attackers well plan to attack and trigger liquidation, depeg, bank-run and collapse of a whole project, platform and ecosystem.

But can this even be compared to LUNA/UST? Here we have a completely different scenario. There might not even be a coordinated attack. I mean it could be an attack where the attacker is selling stETH dropping the price, but maybe it's just market insecurity after the big dump, and many people just want to get back their "good old fiat" and don't want to hold crypto in any form. (In that case it could be a buying opportunity for stETH?

hd49728

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Quote from: adaseb on June 12, 2022, 11:56:48 PM

Honestly it’s one surprise after another. With Luna failing who knew we would get another catastrophic even so quickly.

The successful atrack on Luna and UST initiates a new dangerous and deadly trend in crypto. Attackers well plan to attack and trigger liquidation, depeg, bank-run and collapse of a whole project, platform and ecosystem.

The market temporarily is perfect when many entities over leveraged because of bull run last two years.

RussianEnglishTranslation

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Quote from: minhtra on June 10, 2022, 12:51:41 PM

stETH to ETH ratio is now trading at 0.95 ETH. According to Lido, 1 stETH is always 1 ETH redeemable after the proof of stake merge.
Lot people use stETH to do leverage borrowing - is another Terra incident coming or is this different?

stETH is an IOU. If people are not significantly incentivized to hold stETH, then the liquidity pool will be drained of Ethereum. For me, Ethereum staking is unsafe and convoluted and I prefer ICP staking, which has a much higher APY anyway. NEAR protocol is also a good alternative for staking.

adaseb

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Honestly it’s one surprise after another. With Luna failing who knew we would get another catastrophic even so quickly.

Basically it depeged, but it seemed like FTX was buying all the stETH and then all of a sudden we see BTC withdraws sent from Celcius to exchanges and then an announcement of frozen withdraws.

Seems like MtGox part 2. Not looking great.

Xal0lex

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Loss of binding is already at 5.6%. I read that with a 10% or more loss of the peg, a cascade of liquidations could begin, which could lead to an even greater loss of the peg and a repeat of the unfortunate events with LUNA and UST. Right now, the margin traders who used stETH as collateral for their credit are the first ones at risk.

minhtra

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stETH to ETH ratio is now trading at 0.95 ETH. According to Lido, 1 stETH is always 1 ETH redeemable after the proof of stake merge.
Lot people use stETH to do leverage borrowing - is another Terra incident coming or is this different?

Topic: Lido Staked ETH (stETH) is depegging, is this another disaster? (Read 133 times)