⏰When a Single ETH Withdrawal Reverberates across DeFi:
Here's what happened. Rough timeline:
• @justinsuntron pulls ETH → Aave borrow rates surge
• stETH yield loops unwind → 18-day staking queue overload
• stETH peg dips ~30 bps, 10x leveraged positions, face ~3% losses or liquidation
- Oracle Pricing:⛓️💥
Aave and other protocols price stETH based on its redemption value (what you’d get after 18 days), not the live market price. That keeps collateral value “locked” but also traps lenders in a falling market if the peg worsens
- Risk of Liquidation:🎳
If interest accrues on these borrowed positions faster than the $stETH peg recovers, some positions could be forcibly liquidated. That would add more selling pressure, pushing stETH even further from its intended 1:1 peg with $ETH
@LidoFinance should adopt adaptive queue sizing and partial instant withdrawals to ease redemption pressure, 🩹defend the peg and prevent a deleveraging spiral
#DeFi #stETH #LidoFinance #Aave
Show original
19.19K
3
The content on this page is provided by third parties. Unless otherwise stated, OKX is not the author of the cited article(s) and does not claim any copyright in the materials. The content is provided for informational purposes only and does not represent the views of OKX. It is not intended to be an endorsement of any kind and should not be considered investment advice or a solicitation to buy or sell digital assets. To the extent generative AI is utilized to provide summaries or other information, such AI generated content may be inaccurate or inconsistent. Please read the linked article for more details and information. OKX is not responsible for content hosted on third party sites. Digital asset holdings, including stablecoins and NFTs, involve a high degree of risk and can fluctuate greatly. You should carefully consider whether trading or holding digital assets is suitable for you in light of your financial condition.