Lido Staked Ethereum (stETH), a token that represents staked Ethereum on defi platform Lido, has depegged sharply in the past 24 hours.
stETH is down nearly 4% in the past 24 hours at $1,695.28. It is supposed to trade at a 1:1 ratio to ETH, which is currently at $1,771.43. The token can be redeemed for ETH on Lido.
The token’s depegging stems from a large imbalance in a Curve Finance liquidity pool, crypto researcher @SmallCapScience noted in a Twitter thread. The imbalance in the pool is likely to worsen, causing further losses in stETH.
This has been exacerbated by major crypto trader Alameda- who is one of the largest holders of stETH, dumping $1.5 billion worth of the token– all of their holdings. This could result in a broader bank run, bringing prices down drastically like those seen in Terra.
How will the stETH depegging play out?
Alameda was one of the seven largest holders of the defi token. Their $1.5 billion dump, which was largely through swaps on Curve Finance, could trigger a broader bank run.
