According to Cathie Wood’s Ark Investment Management, the freeze on the withdrawal of the Celsius Network earlier this month created an opportunity for patient traders to trade Ethereum ($ ETH) arbitrage as the bet Ethereum tokens began trading at a discounted price. ..
Cryptocurrency lenders generated yields through institutional lending, mining, and decentralized finance (DeFi) lending, Ark Analyst Frank Downing said in a newsletter. According to analysts, some of that yield will be generated by stETH, a bet Ether token of Lido Finance, backed 1: 1 by Ethereum bet on the Beacon Chain.
About 41% of Celsius’ DeFi deployments were stETH and 30% were Ethereum proof of stake deposits. The latter is illiquid until Ethereum moves to the Proof of Stake consensus algorithm on the mainnet, and this move is expected to occur later this year. Nevertheless, tokens allow ETH stackers to remain liquid and stETH is free to trade in the market.
According to analysts, Celsius may move stETH from the main wallet to a wallet belonging to the cryptocurrency exchange FTX to fund withdrawal requests from customers, as Benzinga first reported. .. This move affected the price of stETH. It is now down to 0.934 ETH while being supported 1: 1 by cryptocurrencies.
Analysts said the discount would provide arbitrage opportunities for patient investors who are willing to hold stETH until they can withdraw from Ethereum after the merger.
With each downing, Celsius suspended the withdrawal to give him time to move out of a dangerous position. The move could worsen market sentiment and put further downward pressure on cryptocurrency prices, which would lead to more regulatory scrutiny.
Global Block analyst Marcus Sotiriou told the Financial Times that the stETH-ETH pegs are broken.
Sotiriou said the company “has huge loans to illiquid positions to pay its customers redemptions,” which could lead to a shortage of funds in just five weeks.
In announcing the freeze, Celsius wrote, “We will take this action today to put Celsius in a better position to respect our withdrawal obligations over time.” This allows users to continue to earn rewards for their holdings.
There were questions surrounding high yields in Celsius and exposure to Terra’s ecosystem before collapse, and questions surrounding losses after Badger DAO hacking.
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