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- sETH represents the token for staked Ethereum on Lido Finance, integrating the value of staking reward and initial deposit.
- A derivative digital asset backed in the ratio of 1:1 by Ethereum. Users staking Ethereum on Lido Finance get staked derivatives back.
- As of now, Ethereum was trading at the market value of $1,468.81, down by 8.51% during the past 24 hours.
Constant Downtrend
stETH is a Lido Finance currency that represents staked Ether and combines the value of an initial investment with staking incentives. A convertible token backed by ETH at a 1:1 ratio.
The staked derivative is given to users that stake their Ethereum on the Lido Finance platform.
While staked, users/stakers have exposure to the worth of their staked tokens. But what about the disadvantages?
For the second time in a month, Lido’s staked ETH (stETH) token price has fallen to a 5% discount to Ether (ETH), amid concerns about dwindling staking derivative liquidity.
On the open market, token holders may sell their stETH for ETH. But what if liquidity continues to dwindle? That’s exactly what’s going on here.
The pool has become imbalanced as a result of the enormous selling volume. Curve, the primary DeFi liquidity pool, is one instance. As at the time of publication, it has a 22 percent ETH to 78 percent stETH ratio. The pool has never been more imbalanced as it is now.
The imbalanced pool indicated that one of the assets, in this instance stETH, is getting more illiquid, i.e. it will become more hard to sell due to a lack of ETH availability to accommodate stETH sell orders at present rates.
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The present stETH/ETH pool asset ratio is lopsided, as per Curve, with ETH responsible for 24.11 percent and stETH for 75.89 percent. stETH has been partially de-pegged.
AlamedaResearch, in fact, abandoned their stake yesterday, unloading approximately 50k stETH in only a few hours.
CelsiusNetwork is soon running out of liquid assets to repay investors who are redeeming their shares. sETH, on the other hand, has experienced a further 10% correction, making things much worse for the network.
Anurag is working as a fundamental writer for The Coin Republic since 2021. He likes to exercise his curious muscles and research deep into a topic. Though he covers various aspects of the crypto industry, he is quite passionate about the Web3, NFTs, Gaming, and Metaverse, and envisions them as the future of the (digital) economy. A reader & writer at heart, he calls himself an “average guitar player” and a fun footballer.
