- Renzo restaked ETH (ezETH) crashed as low as $750 early Wednesday, trading at a massive discount to wrapped ether (WETH).The sell-off was likely catalyzed by users looking to reclaim their ETH in low liquidity conditions and large liquidations of ezETH-collateralized positions.
On Wednesdays early hours, Renzo’s ezETH, the token signifying a user’s staked ETH position within Renzo, underwent a temporary price drop. In this low-liquidity market, ezETH traded significantly lower than wrapped ether (WETH).
According to DEXscreener’s data, ezETH reached a minimum price of $750 on Uniswap, an Ethereum decentralized exchange, around 02:45 UTC. This token strayed from its equal footing with WETH, touching a low of 0.27.
Renzo, the second largest liquid staking platform, employs Ethereum’s staking protocol Eigenlayer, enabling users to stake their Ether (ETH) and receive Renzo’s ezETH in return. Users can then utilize ezETH across various decentralized finance projects to earn additional income.
On Taylor’s Third, Renzo unveiled their economic blueprint and distributed their REZ token through an airdrop. Users are eligible to claim their tokens on the Fifth of May. The initial reward phase concludes on the Twenty-Sixth of April, marking the start of the subsequent phase. Those disposing of ezETH prior to the Twenty-Sixth may miss out on the airdrop.
Based on reports from onlookers, the sudden drop in ETH sales may have been initiated by users aiming to recover their ETH and utilize it in alternative staking markets instead.
“On Uniswap, where people traded ezETH, the insufficient market liquidity led to larger price discrepancies. This price drop below $700 triggered significant automated liquidations on Gearbox and Morfo, as per Hitesh Malviya’s explanation to CoinDesk, founder of DYOR crypto analytics platform.”
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According to an anonymous observer named Tommy, the early drop in price may have been worsened by traders or “loopers” selling off their ether (ETH) holdings as collateral to obtain more borrowed ETH for increasing leverage, thereby amplifying the price decline.
The investor community expressed dissatisfaction over the token’s supply chart, contributing to the recent price decline, Do Your Own Research suggested.
“Malviya explained to CoinDesk another problem was due to an error on the token distribution chart, showing 65% going to the team and investors. After correcting and deleting the tweet, a wave of criticism swept through the community.”
The price drop was brief, and soon enough, both ezETH and ether had bounced back to surpass the $3,000 mark. At the current moment, ezETH was being exchanged for $3,172 on Uniswap, while ether was selling for $3,281.
Attempts to contact Renzo were unsuccessful.
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2024-04-24 16:29