Unchained

In the Recent Crypto Market Meltdown, What Role Did Lido's stETH Play? - Ep. 370

Jul 5, 2022

Hasu, strategy lead at Flashbots and advisor to Lido, teams up with Tarun Chitra, founder of Gauntlet, to dissect the world of staked ETH (stETH). They discuss Lido's impact on liquid staking, unraveling its market dominance. The duo explains why stETH isn't mispriced and the risks it faces, especially during liquidity crises. They also delve into the implications of the Ethereum Merge for stETH liquidity and the complex governance needs as Lido grapples with market fluctuations. Insightful and engaging, this conversation navigates the intricate landscape of decentralized finance.

01:11:21

Creator website

Episode guests

Tarun Chitra

Hasu

AI Chapters

Episode notes

Intro

2min

Navigating Staked Ethereum in a Volatile Market

24min

Insights on Crypto Dynamics Post-Merge

4min

Ethereum Merge: Confidence and Concerns

7min

Lido's Impact on ETH Staking Dynamics

15min

Evolving Governance Structures in Ethereum's Bear Markets

1min

Lido's Self-Limitation Proposal and Governance Dynamics

8min

Navigating Staked ETH and Market Uncertainty

8min

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/

Oasis: https://oasisprotocol.org/grant-programs?utm_source=unchained&utm_medium=partnership&utm_campaign=podcast-oasis-grants-program

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/

Learn more about your ad choices. Visit megaphone.fm/adchoices

Remember Everything You Learn from Podcasts

Save insights instantly, chat with episodes, and build lasting knowledge - all powered by AI.