{"id":288917,"date":"2024-04-24T20:52:26","date_gmt":"2024-04-24T15:22:26","guid":{"rendered":"https:\/\/dripp.zone\/news\/?p=288917"},"modified":"2024-04-24T20:52:26","modified_gmt":"2024-04-24T15:22:26","slug":"renzos-ezeth-token-depeg-triggers-liquidations-across-defi-platforms-crypto-news","status":"publish","type":"post","link":"https:\/\/dripp.zone\/news\/renzos-ezeth-token-depeg-triggers-liquidations-across-defi-platforms-crypto-news\/","title":{"rendered":"Renzo’s ezETH token depeg triggers liquidations across DeFi platforms – Crypto News"},"content":{"rendered":"
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Renzo\u2019s liquid restaking token (LRT), ezETH, experienced a significant depegging event that liquidated millions from \u201cloopers\u201d using the token as collateral on leverage protocols like Gearbox.<\/p>\n

According to data<\/a> from CoinMarketCap, the digital asset\u2019s value plunged to a low of $2,755 before recovering to its current level of $3,178 as of press time.<\/p>\n

Notably, decentralized exchange Uniswap<\/a> witnessed a more severe depegging of ezETH, with its value dropping<\/a> to as low as $700, attributed to liquidity challenges.<\/p>\n

Renzo is a prominent liquid restaking protocol, with over $3 billion worth of assets locked on its platform, according to DeFillama data<\/a>.<\/p>\n

Liquidation galore<\/span><\/p>\n

The DeFi protocol Gearbox confirmed that the depeg led to the liquidation of several Credit Accounts.<\/p>\n

The protocol\u2019s founder, 0xmikko, provided more insights into the situation, saying<\/a>:<\/p>\n

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\u201c115 Credit Accounts were liquidated, 10,650 ezETH were sold on Balancer pool. Liquidation losses of 25.77 ETH were automatically covered by internal Gearbox reserve fund, no action needed.\u201d<\/p>\n<\/blockquote>\n

Simultaneously, Cork Protocol, another DeFi platform, explained<\/a> that the liquidations caused a substantial sell-off of ezETH previously held as collateral. This flood of supply overwhelmed the market, driving the price of ezETH down to 0.2.<\/p>\n

Interestingly, these liquidations occurred alongside the release of Renzo\u2019s native REZ token, sparking the emergence of Renzo-related phishing scams on social platform X (formerly Twitter).<\/p>\n

Web3 security firm Scam Sniffer identified<\/a> two instances where Renzo users cumulatively lost more than $500,000 to a malicious permit signature scam.<\/p>\n

Amidst this market turmoil, trader czsamsunsb.eth capitalized on the situation, investing 4,099 ETH<\/a> to acquire 4,221 ezETH. This move proved lucrative, as the trader earned a remarkable profit of 121.65 ETH, per Lookonchain\u2019s findings<\/a>.<\/p>\n

What does this mean for LRTs?<\/h2>\n

Crypto analyst Tommy explained<\/a> that the depegging represents a significant risk across all LRTs, even with withdrawal options enabled. He noted that a depegging event in a decentralized exchange (DEX) pool could occur due to temporary imbalances.<\/p>\n

Similarly, DeFi researcher Ignas warned<\/a> of potential exacerbation in LRT depegging, mainly if Eigenlayer<\/a>, the platform where these tokens operate, introduces two key upgrades of slashing and permissionless AVS.<\/p>\n

Ignas explained that an AVS malfunction leading to slashing could reduce restaked ETH balances by a hypothetical 5%. While this might seem manageable for direct Eigenlayer stakers, it could trigger substantial disruption to LRT pegs due to liquidity concerns and subsequent panic-driven mass withdrawals.<\/p>\n

He noted that while prices may stabilize post-slash, the interim period could witness harsh liquidations, and the risk of slashing grows as more AVSes come online.<\/p>\n

Consequently, he added:<\/p>\n

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\u201cIt\u2019s all FUD right now as slashing won\u2019t derail Eigenlayer but LRTs 1) with low liquidity 2) and are widely accepted as collateral can cause disproportional damage.\u201d<\/p>\n<\/blockquote>\n

Mentioned in this article<\/h6>\n
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Latest Alpha<\/span> Market Report<\/h6>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Renzo\u2019s liquid restaking token (LRT), ezETH, experienced a significant depegging event that liquidated millions from \u201cloopers\u201d using the token as collateral on leverage protocols like Gearbox. According to data from CoinMarketCap, the digital asset\u2019s value plunged to a low of $2,755 before recovering to its current level of $3,178 as of press time. Notably, decentralized […]<\/p>\n","protected":false},"author":2,"featured_media":288918,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[274,273,272,244,266,271,268,270,269,267],"class_list":["post-288917","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-de-fi","tag-crypto-finance","tag-decentralized-finance","tag-liquidity","tag-metamask","tag-pancake","tag-slippage","tag-sushiswap","tag-tronlink","tag-trust-wallet","tag-uniswap"],"_links":{"self":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/288917","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/comments?post=288917"}],"version-history":[{"count":2,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/288917\/revisions"}],"predecessor-version":[{"id":288920,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/288917\/revisions\/288920"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media\/288918"}],"wp:attachment":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media?parent=288917"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/categories?post=288917"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/tags?post=288917"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}