On April 24, the price of Renzo Protocol’s EZETH token depegged, momentarily falling to $688 on Uniswap before leveling off at parity with Ether (ETH), according to Dexscreener statistics.
According to a post made on April 24 by anonymous crypto analyst Tommy, this occurrence appears to have been set off by a wider market sell-off that followed the end of Renzo Protocol’s season 1 airdrop:
“The sell-off is probably due to the Season 1 Airdrop ending, as users want to reclaim their $ETH to farm other LRT/protocols that require liquid tokens.”
With a total value locked (TVL) of more than $3.3 billion, Renzo is the second-largest liquid restaking protocol—a 126% increase over the previous month.
DefiLlama reports that Ether.fi is leading with over $3.9 billion in TVL.
The researcher emphasized that these depegging instances provide a reoccurring difficulty for liquid restaking tokens (LRTs):
“On the depeg, it is a risk that we need to acknowledge for all LRTs; the DEX pool may still depeg due to a transient imbalance even if withdrawal is permitted.”
On leveraged platforms like Gearbox and Morpho Labs, the depegging event led to numerous liquidations. Loopers, or users who frequently used LRTs as collateral to borrow ETH, were primarily affected and suffered the most losses.
After Renzo Protocol’s incoming token (REZ) was added to the Binance launch pool on April 23, in tandem with the announcement of its upcoming airdrop—of which 10% of the token allocation was reserved for season 1—the protocol gained further notice.
Crypto trader czsamsunsb.eth made a substantial profit after Renzo’s depegging; in just two hours, he earned 121.65 ETH, or more than $396,000.
Lookonchain, an on-chain intelligence company, claims that:
In just two hours following the depegged of $EZETH (Renzo Restaked ETH), czsamsunsb.eth made 121.65 $ETH! He successfully purchased 4,221 $EZETH for 4,099 $ETH, so 121.65 $ETH!
April 2024, Cryptoniteuae
