Will Lido Staked Ether trigger the next big crypto crash?

Will Lido Staked Ether trigger the next big crypto crash?

The crypto derivative of Lido, which represents staking-ether (Steth), has slipped by about 6 % last 72 hours that there could be another large crypto crash similar to the collapse of Luna in the last month.

Steth is a token replacement for ether that is blocked within the Staking protocol Lido. The digital asset effectively represents the paid ETH, while Lido distributes the associated staking rewards to its users. Steth tokens are shaped when Ether is stored and burned in redemption.

Steth was seen as a secure asset, which effectively coupled 1: 1 to Ether and supported by ETH in the Beacon of Ethereum, Chaindie has been running since December 2020.

Steth has been used as security for the open source liquidity protocol AAVE since March, which enables those who use the ether to support the switch from Ethereum to Proof-of-Stake in order to achieve a leverage on your blocked crypto.

Due to the current market volatility, users in the Curve pool to pay off their ETH in a decentralized stock market liquidity pool on Ethereum, which was developed for stablecoin trading. As a result, Steth is now more difficult to pay than ETH-which leads to de-pegging.

But in contrast to stable coins with redemption mechanisms, Steth can only be unlocked in Ethereum's proof-of-stake chain (as soon as it goes live). The token is more like a liquid, interest -bearing digital asset.

Therefore, the value of Steth cannot really be equated with ETH due to the risks associated with the upcoming Ethereum fusion, including delays and cancellations. If the liquidity dries up on a market, the price of the associated wealth value also drops.

Despite Steth's latest decline, positive signs indicate that it is less risky to own it; The Ethereum Ropsten Testnet successfully switched to Proof-of-Stake last week.

Nevertheless, Steth has become a problem for some of his biggest owners-including Celsius, a crypto rental platform where is over 3.8 billion dollar value was deposited by Steth.

Celsius exposed all withdrawals and transfers yesterday. Despite the strong recovery this morning, Celsius's own native Cel token fell by about 60 % last week and had fallen by 34 % in the last 24 hours at the time of going to press. It is currently more than 96 % under his all -time high from the beginning of June.

The Liquidity Protocol AAVE urgently calls on its community members to consider an interruption of the Steth market and the termination of the ETH loan "as an additional precaution".

"Our risk monitoring system continues to measure the risk in AAVE", John Morrow, Chief Operating Officer at Gauntlet, which carries out risk reviews for the set -up protocol. "Since it takes a few days for governance to pass and come into force, we encourage the community to carefully examine the effects of ... changes. If the market conditions deteriorate, we will urgently recommend taking these measures immediately."