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Renzo Protocol’s EZETH Depeg Triggers Market Turbulence and Trader Profits

Renzo Protocol’s EZETH token experienced a price depeg on April 24, briefly plummeting to $688 on Uniswap before stabilizing at its parity with Ether (ETH), Dexscreener data reveals.

This incident seems to have been triggered by a broader market sell-off following the conclusion of Renzo Protocol’s season 1 airdrop, as noted by pseudonymous crypto analyst Tommy in an April 24 post:

“The sell-off likely caused by the conclusion of Season 1 Airdrop, users want to get back $ETH to farm other [liquid restaking tokens] LRT/protocols.”

Renzo stands as the second-largest liquid restaking protocol, boasting a total value locked (TVL) surpassing $3.3 billion, marking a 126% increase over the past month.

Ether.fi leads with over $3.9 billion in TVL, according to DefiLlama.

These depegging incidents present a recurring challenge for liquid restaking tokens (LRTs), as highlighted by the analyst:

“On the depeg, it is a risk that we need to recognize for all LRTs, even if withdrawal is enabled, the DEX pool can still depeg simply based on the temporary imbalance.”

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The depegging event triggered widespread liquidations on leveraged platforms like Gearbox and Morpho Labs, particularly affecting loopers, users leveraging LRTs repeatedly as collateral to borrow ETH, who bore the brunt of the losses.

Renzo Protocol garnered increased attention following the addition of its incoming token (REZ) to the Binance launch pool on April 23, coinciding with the announcement of its forthcoming airdrop, where 10% of token allocation was earmarked for season 1.

In the wake of Renzo’s depegging, crypto trader czsamsunsb.eth managed to profit significantly, earning 121.65 ETH, equivalent to over $396,000, within two hours.

According to on-chain intelligence firm Lookonchain:

“czsamsunsb.eth made 121.65 $ETH in just 2 hours after $EZETH (Renzo Restaked ETH) depegged! He spent 4,099 $ETH to buy 4,221 $EZETH successfully, making 121.65 $ETH!”


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Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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