NewsletterStaked Ether (stETH)/ETH Peg Deviates Further, Risks Another Crypto Market Crash?
Staked ETH (stETH) deviates further from Ethereum (ETH) with the exchange rate on Curve dropping to 0.9585 ETH. The stETH-ETH peg is impacted after Three Arrows Capital removed 20,945 stETH worth nearly $33.76 million and Aave paused Ethereum (ETH) borrowing until the Merge. This risks another liquidity crisis similar to June.
Staked Ether (stETH) Deviates From Ethereum (ETH) Peg
According to the Curve liquidity pool, the Staked Ether (stETH) exchange price has dropped to 0.9585 ETH. Moreover, the current pool has 155,860 ETH accounting for 22.72% and 530,141 stETH accounting for 77.28%.
The Staked Ether price has deviated further from Ethereum (ETH) price as users unwind their positions to receive ETHW forked airdrop. EthereumPoW plans an Ethereum hard fork as Ethereum switches to PoS after the Merge. ETHW is its native token.
Moreover, Aave pausing ETH borrowing and Three Arrows Capital and whales removing stETH from liquidity pools have impacted the stETH-ETH peg.
DeFi lending and borrowing platform Aave passed a governance proposal to stop ETH borrowing until the Merge. Massive ETH borrowing ahead of Merge and Ethereum PoW hard fork could have increased insolvency risk for Aave. In fact, Aave pausing ETH borrowing has caused Instadapp users to unwind their positions in stETH/ETH pool.
Three Arrows Capital removed 20,945 stETH worth nearly $33.76 million from the Curve ETH liquidity pool yesterday. Three Arrows currently has Staked Ether worth over $31 million in its wallets.
Also, ETH whale “BlueWhale0211” removed 11,393.81 Staked Ether worth $16.63 million. These removals of Staked Ether have caused the peg to deviate further.
Staked Ether’s Link to Crypto Market Crash
Staked Ether (stETH) losing its peg to Ethereum (ETH) last June caused a liquidity-led crypto market crash. The liquidity crisis in the DeFi market triggered a contagion effect causing crypto companies including Three Arrows Capital, Voyager, and Celsius to file for bankruptcy, while others paused withdrawals due to lack of liquidity.
The Staked Ether and ETH prices have dropped 9% in the last 24 hours. At the time of writing, the Staked Ether price is trading at $1,457 while Ethereum’s price is trading at $1,514.
Why Trust CoinGape
CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more… to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
Premium Partners
Delivered every day.
- Insights that move markets
- 100,000 active subscribers
Related Articles
- December Recovery Ahead? Coinbase Outlines Why Crypto Market May Rebound
- Peter Brandt Hints at Further Downside for Bitcoin After Brief Rebound
- $1.3T BPCE To Roll Out Bitcoin, Ethereum and Solana Trading For Clients
- Why is the LUNC Price Up 70% Despite the Crypto Market’s Decline?
- CoinShares Fires Back at Arthur Hayes, Dismisses Fears Over Tether Solvency
- Ethereum Price Holds $3,000 as Bitmine Scoops Up $199M in ETH; What Next?
- Solana Price Outlook Strengthens as Spot ETFs See $15.68M in Fresh Inflows
- Dogecoin Price Gears Up for a $0.20 Breakout as Inverse H&S Takes Shape
- Bitcoin Price Forecast as BlackRock Sends $125M in BTC to Coinbase — Is a Crash Inevitable?
- XRP Price Prediction As Spot ETF Inflows Near $1 Billion: What’s Next?
- Solana Price Outlook: Reversal at Key Support Could Lead to $150 Target
