Lido Staked Ethereum (stETH), a staked, DeFi variant of Ethereum, has diverged sharply from the latter in the past 48 hours.
The token, which is supposed to trade at a 1:1 peg to ETH, is currently trading at $1,513.14 and has fallen 10% in the past 24 hours. By comparison, ETH is trading at $1,582.
stETH has been depegging since late-Thursday, with the first wave of losses stemming from a massive $1.5 billion dump by Alameda Capital– one of the largest holders of stETH. Alameda sold all of its holdings of the token.
stETH does not have a direct link to ETH prices. It can be redeemed for ETH only after the merge becomes effective- the date of which is currently unknown.
But the token’s main role as collateral on DeFi platforms such as AAVE and Lido could have dire implications for DeFi. Sharp losses in stETH are also causing panic selling in Ethereum.
How will stETH affect ETH prices?
stETH, which represents ETH currently locked on the Ethereum 2.0 beacon chain, is usually used as...
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