Here the crypto market is hardly showing any growth amidst the ongoing crypto crash, yet another one seems to create a similar situation.
It hasn’t been long since a stablecoin collapse in the form of UST algorithmic stablecoin of Terra network has resulted in massive shock to the whole crypto market. Cryptocurrencies across the space are still struggling to keep up the pace but it seems like another cryptocurrency is moving towards such controversy of creating chaos. Again digital assets in the crypto market can see destruction due to this coin but it does not belong to a stablecoin category this time.
Many people think that Staked Ether or also called as stETH could be another crypto asset that could bring chaos in the crypto space. Staked ether is supposed to follow the actual price of Ethereum (ETH) but it’s not followed it for the past few weeks. Trading of stETH below the value of ETH as must do is becoming the reason for people getting skeptic of crypto assets once again while expecting another liquidity crisis in the space.
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It was on Friday when staked ETH was about 8% down from actual ETH price which meant once stETH equated for about 0.92 ETH. This is considered to be enough margin to create panic amongst the investors. The fall in price of stETH started after the market crash started after Terra networks collapse and further crypto lending platform Celisus’ halting withdrawal operations on its platform also made impact in stETH, as investors started selling off the crypto asset.
As its name Staked Ether or stETH suggests, it represents a unit value of ether deposited or staked in Ethereum’s proof of stakes ‘Beacon Chain’. The underlying blockchain network of ETH, Ethereum is under the up-gradation process where it is anticipated to become a more efficient, faster and cheaper blockchain network. The Beacon Chain is also part of this process to check the environment for the upgrade.
Else staking is a general practice in the crypto world where deposited tokens get locked up for a certain period of time that further contributes to the crypto network’s security. In return of staking their crypto assets, investors receive yield in the form of rewards generated as interest.
Source: https://www.thecoinrepublic.com/2022/06/21/why-staked-ether-steth-seems-to-be-responsible-for-another-liquidity-crisis/