Justin Sun’s $600 Million Ethereum Exit Triggers stETH Depeg
The post Justin Sun’s $600 Million Ethereum Exit Triggers stETH Depeg appeared on BitcoinEthereumNews.com. A massive $1.7 billion worth of ETH has been pulled from Aave over the past week. Aave community members believe Tron founder Justin Sun withdrew at least $600 million, sparking a cascade of market reactions. The large exit led to a sharp drop in ETH liquidity on Aave. Ethereum Whale Movement Causes Sharp Drop in stETH Continuous whale exit on Aave pushed utilization rates higher, which in turn caused ETH borrowing rates to spike. As borrowing became expensive, DeFi users who relied on leveraged staking strategies began unwinding positions. One of the hardest-hit strategies was the popular stETH/ETH leverage loop. Charts show that stETH depegged from ETH sharply before recovering. StETH/ETH Chart. Source: TradingView Users typically deposit ETH, borrow against it, buy stETH, and repeat the cycle to earn staking yields. However, higher borrow rates and a weakening stETH peg made the strategy unprofitable. As loopers began to exit, many rushed to redeem stETH for ETH. This created congestion in the staking withdrawal queue, which currently takes about 18 days to process. To avoid the wait, some users offloaded stETH on secondary markets, causing a depeg of approximately 0.3%. What happens when Justin Sun withdraws 600M of $ETH from Aave? • ETH Borrow & Lend rates spike ⬆️• The backbone of DeFi, LST looping, is temporarily unprofitable• The market stETH / ETH rate depegs ~0.3% How DeFi’s biggest moves can suddenly spook leverage loopers
The post Justin Sun’s $600 Million Ethereum Exit Triggers stETH Depeg appeared on BitcoinEthereumNews.com.
A massive $1.7 billion worth of ETH has been pulled from Aave over the past week. Aave community members believe Tron founder Justin Sun withdrew at least $600 million, sparking a cascade of market reactions. The large exit led to a sharp drop in ETH liquidity on Aave. Ethereum Whale Movement Causes Sharp Drop in stETH Continuous whale exit on Aave pushed utilization rates higher, which in turn caused ETH borrowing rates to spike. As borrowing became expensive, DeFi users who relied on leveraged staking strategies began unwinding positions. One of the hardest-hit strategies was the popular stETH/ETH leverage loop. Charts show that stETH depegged from ETH sharply before recovering. StETH/ETH Chart. Source: TradingView Users typically deposit ETH, borrow against it, buy stETH, and repeat the cycle to earn staking yields. However, higher borrow rates and a weakening stETH peg made the strategy unprofitable. As loopers began to exit, many rushed to redeem stETH for ETH. This created congestion in the staking withdrawal queue, which currently takes about 18 days to process. To avoid the wait, some users offloaded stETH on secondary markets, causing a depeg of approximately 0.3%. What happens when Justin Sun withdraws 600M of $ETH from Aave? • ETH Borrow & Lend rates spike ⬆️• The backbone of DeFi, LST looping, is temporarily unprofitable• The market stETH / ETH rate depegs ~0.3% How DeFi’s biggest moves can suddenly spook leverage loopers
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