In the Recent Crypto Market Meltdown, What Role Did Lido's stETH Play? - Ep. 370
Unchained
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Insights on Crypto Dynamics Post-Merge
This chapter explores recent changes in the crypto market, particularly the upcoming merge and its implications on stETH's liquidity. It offers insights into the potential timelines for withdrawals and the broader dynamics of the cryptocurrency landscape.
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Hasu, strategic advisor to Lido, and Tarun Chitra, founder of Gauntlet, explain everything about staked ETH, aka stETH, how it should be priced, Lido’s market dominance, and much more. Show highlights:
- the role of Lido, what stETH is, and what its benefits are
- whether Ethereum’s lack of delegated proof of stake contributes to the need for stETH
- why stETH is not mispriced and why it doesn’t necessarily have to be worth 1 ETH
- the inherent risks associated with stETH
- how there was not enough liquidity to handle all the liquidations, especially in automated vaults on, for instance, Instadapp
- how automated market makers work and what Curve’s amplification factor is
- whether 3AC and Celsius had a significant impact on the stETH/ETH “de-peg”
- how does the Merge affect the liquidity of stETH
- Hasu’s and Tarun’s level of confidence that the Merge will happen this year and whether it will be a success
- what will happen to the price of stETH after the redemptions are enabled
- why Lido has achieved such a level of dominance
- how Lido decreases the cost of staking and helps improve the security of the Ethereum blockchain
- whether there is going to be a “winner take all” in the liquid staking derivatives market
- how liquidity fragmentation can cause the system to blow up
- why LDO tokenholders might not have the same incentives as ETH tokenholders
- what is Lido’s new dual governance model and what is it trying to achieve
- whether Lido should self limit its market dominance
- how Lido coordinates validators and the role of the LDO token in this coordination
- what are the lessons to be learned from the stETH situation
- how governance is a liability to DeFi protocols
Thank you to our sponsors!
Crypto.com: https://crypto.onelink.me/J9Lg/unconfirmedcardearnfeb2021
Ava Labs: https://www.avax.network/
EPISODE LINKS
Hasu:
- Twitter: https://twitter.com/hasufl
- Uncommon Core Podcast: http://uncommoncore.co/podcast/
Tarun:
- Twitter: https://twitter.com/tarunchitra
stETH
- Lido’s explanation: https://twitter.com/LidoFinance/status/1535184472546889735?s=20&t=oQeB1uj7HG7Y4he-0gbcLg
- Lido’s explanation #2: https://twitter.com/LidoFinance/status/1536756933054676992?s=20&t=oQeB1uj7HG7Y4he-0gbcLg
- Hasu’s thread #1: https://twitter.com/hasufl/status/1524717773959700481?s=20&t=oQeB1uj7HG7Y4he-0gbcLg
- Hasu’s thread #2: https://twitter.com/hasufl/status/1525427069198508033?s=20&t=oQeB1uj7HG7Y4he-0gbcLg
- Tarun’s take: https://twitter.com/tarunchitra/status/1538775828573609985?s=20&t=oQeB1uj7HG7Y4he-0gbcLg
- Tarun’s paper: Why Stake when you can borrow: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3629988
Lido
- Self-limit?: https://twitter.com/LidoFinance/status/1540258690942615555?s=20&t=sJU5C5xo5litEJrZZDaWNQ
- Hasu on Lido’s dual governance proposal: https://twitter.com/hasufl/status/1540652075352313857?s=20&t=sJU5C5xo5litEJrZZDaWNQ
- Lido’s two phase voting scheme :https://blog.lido.fi/moving-to-two-phase-voting/
- Previous Unchained Coverage on DAO governance: Solend and Bancor Drama: Did These DAOs Violate the Ethos of Crypto?: https://unchainedpodcast.com/solend-and-bancor-drama-did-these-daos-violate-the-ethos-of-crypto-ep-366/
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