Since early May, the largest stETH liquidity pool has shrunk sevenfold.

The total value of assets in Curve’s ETH/stETH liquidity pool declined to about $620 million from $4.5 billion at the start of May, according to Dune Analytics.

The decline of more than sevenfold is primarily linked to liquidations of stETH positions by major crypto investors, such as Alameda and Three Arrows Capital, experts from CoinDesk explained.

The liquid staking service Lido Finance provides to stETH holders, which represent ETH, assets locked in PoS-network Beacon Chain.

Against the backdrop of heavy sell-offs, the price of tokenized ETH diverged from the underlying asset’s quotes. At the time of writing, the discount on stETH had surpassed 6%.

Price pressure is also driven by the pool’s imbalance: around 111,300 ETH corresponds to about 491,000 stETH.

\”I feel sorry for retail holders, because Curve was their only exit. Institutions can still exit this situation via over-the-counter trades, albeit at a much larger discount than on Curve,\” said Vance Spencer, co-founder of Frameworks.

According to Kaiko, up to 98.5% of stETH trading volume goes through the pool. The firm’s analysts noted that in early June the investment platform Amber withdrew assets worth $160 million; Alameda Research sold $88 million of stETH. In May, Three Arrows Capital bought back 400,000 ETH and stETH from the protocol.

\”The reason liquidity providers left is that after the peg was lost, the trade for them became bad because ETH was selling too cheaply. Since the pool became unbalanced, they did not want to be caught in a trap, holding only illiquid stETH,\” said Bob Baxley, CTO of Maverick Protocol.

A major holder of Lido’s tokenized ETH is the crypto-lending platform Celsius, which has run into financial difficulties. According to Nansen, the company owns no fewer than 409,000 stETH — almost four times as much as in Curve’s pool.

\”Celsius cannot sell all its stETH on centralized or decentralized exchanges, and as a result, it probably will or would have to resort to over-the-counter trading to preserve solvency,\” Kaiko commented.

For retail investors, the only real exit from stETH is Curve, a pool shrinking by 10,000–15,000 ETH per day. If this pace continues, it would be drained within two weeks.

is operating normally, despite the asset sell-off by major holders and the discount on stETH.

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