Three Arrows Capital pulled $33 million in stETH from Curve liquidity pool

Linked to the bankruptcy procedure of the cryptocurrency hedge fund Three Arrows Capital (3AC), the address withdrew 20,945 stETH (~$33 million) from the liquidity pool in Curve Finance.

The wallet still holds 9,400 ETH, 20,945 ETH and other assets worth $57.86 million.

Address marked by Nansen as Three Arrows Capital (0x23
…8143) has removed ~20,945 stETH (~$33 million) from Curve. The address currently holds 9,400 ETH, 20,945 stETH and other tokens, worth a total of $57.86 million.https://t.co/gKpgXc4g4P

— Wu Blockchain (@WuBlockchain) September 6, 2022

Adam Cochran, a partner at venture firm Cinneamhain Ventures, noted that against the backdrop of pause in Aave borrowing on Ethereum ahead of The Merge, many users have begun closing positions in Curve, which could be a remake of the events of the summer this year.

Aave pausing ETH markets causing Instadapp to unwind massively in the stETH/ETH pool, and 3AC pulled their pool liquidity making it worse…

Did I just wake up back in July?

Is the next leg down really going to be the exact same trade unwinding!?

— Adam Cochran (adamscochran.eth) (@adamscochran) September 7, 2022

An analyst under the pseudonym DeFiyst reported that the borrowing rate on Ethereum rose from 10% to 20%, putting pressure on the stETH/ETH price. The situation could be worsened by the imminent sale of 3AC’s “staked Ether”.

«It hurts to be in one of these strategies right now», — wrote he.

Within 10 hours of this vote passing, ETH utilization has already ticked up another 2.5% (doubling the borrow APR from 10%->20%, and stETH/ETH is down 0.2%.

Painful to be in one of these strategies right now.

And there’s still 13hrs to go until Aave WETH borrow is paused. https://t.co/diHysVRCc7 pic.twitter.com/E4ngmPDnN6

— DeFiyst (@DeFiyst) September 6, 2022

The stETH discount to ETH on Curve widened to 4.15%. Analyst Colin Wu did not rule out interest in profiting from potential PoW forks of the second-largest cryptocurrency.

The stETH exchange price on Curve has dropped to 0.9585 ETH. There are currently 155,860 ETHs (accounting for 22.72%) and 530,141 stETHs (accounting for 77.28%) in the current pool. There may be some demand for receiving forked airdrops. https://t.co/8y3bNNEX3m

— Wu Blockchain (@WuBlockchain) September 7, 2022

Meanwhile, Nansen’s CEO Alex Svanevik detected a substantial inflow of “smart money” into staking versions of ETH — stETH, aSTETH, cbETH, icETH — and the withdrawal of blocked stETH on Aave.

interesting smart-money flows around ETH staking tokens

stETH, aSTETH, cbETH, icETH, … pic.twitter.com/wmjDWL98p6

— Alex Svanevik 🐧 (@ASvanevik) September 7, 2022

As reported, Ethereum developers planned the migration of the mainnet to the Proof-of-Stake algorithm around September 15.

On September 6 they activated the Bellatrix upgrade. The upgrade is the final step before The Merge.

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