2022-06-10 20:03:35
To all those who don't know what is stEth
Back in 2021 users were asked to deposit 32 eth (not sure about the number ) in the beacon chain in preperation of pos merge which will be unlocked in q2 of 2023
So everyone did not have 32 eth and thus liquid staking was born and Lido is a main player in it
Anyone can deposit eth in Lido and stEth . So your eth is "liquid" and also earn the staking reward which is 4% pa approx now
But the problem is this stEth cannot be redeemed back to eth because the eth is locked
Due to some circumstances such as rumours spreading celsius is becoming insolvent soon .
2) People thinking stEth is like UST (which iit is clearly not because it's not a pegged asset . It just token saying you hold x amount of eth which is locked . In no way UST and stEth is connected )
3) Cascading liquidation in aave (you can deposit stEth and borrow eth and repeat and could have earned around 10% apy on your eth )
4) Entities like Alameda selling their stEth and curve has very less liquidity (79% stEth sided )
Risks :-
1) Eth fails and pos fails thus your are not able to redeem your funds
2) Smart contract risk (upto a certain degree only)
3) Lido facing some kind of governance attack or something
Imo if you are looking to buy eth buy stEth instead for long term holds
Not financial advice a lot of things could go wrong
90 viewsinfamousdegen, edited 17:03
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