The unbinding of staked Ether in Lido Finance differs from the Terra USD parity loss with the US dollar. CoinShares analysts arrived at this conclusion.
Is the decoupling of Lido staked ETH another stablecoin collapse? Our analyst @marcarjoon explores the risks and rewards of the liquid staking service and why no silver bullet solution has yet been offered. Click here to read the full article: https://t.co/gIMR6opo9S
— CoinShares 👩🚀 (@CoinSharesCo) June 17, 2022
Experts noted that stETH does not need to maintain a 1:1 ratio to ETH for proper operation. The coins locked in staking continue to secure the network, while the derivative version of Ethereum can be moved into various DeFi projects to extract additional yield.
Specialists forecast the discount would persist until the ability to withdraw ETH from the deposit contract appears. They attributed the observed discrepancy to “the absence of arbitrage opportunities” for its elimination.
CoinShares noted community concerns about rising dominance of Lido Finance among platforms operating under the Staking-as-a-Service (SaaS) model. The project’s share reached 31.9% of the total 12.92 million ETH ($14.69 billion).
Experts pointed to liquidity issues for some market makers, since the ability to withdraw ETH to the Beacon Chain will appear only after some time after the merger (The Merge). This led to selling of stETH.
Referring to on-chain data, specialists stressed that such participants as Celsius Network have enough assets to meet obligations. However, “given the opacity of centralized organisations, this is no guarantee,” they added.
For long-term investors whose profits and losses are denominated in ETH, the discount created a buying opportunity, while USD-denominated traders will likely need to close their positions. For arbitrageurs, there is the option to open a long position in stETH and a short in ETH.
CoinShares is convinced that the June 8 transition of the Ropsten testnet to PoS gave confidence to those who foresee the disappearance of the divergence between the two assets in the future.
Experts did not rule out that the loss of stETH parity with ETH would intensify calls for regulation of crypto-lending platforms.
As reported, the BIS Innovation Hub will develop a platform to assess the risks to financial stability associated with stablecoins and crypto-lending projects for financial stability.
ForkLog recently reported that the TVL of the largest liquidity pool for stETH fell sevenfold over a month and a half.
Earlier, Lido Finance stated that the service is operating normally, despite the sell-off by large holders and the stETH discount.
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