The Next Crypto Depeg? Staked Ether, ETH Show Signs of Divergence

The Lido protocol said stETH was trading at a 4.2% discount to ether on Friday morning

article-image

Blockworks exclusive art by axel rangel

share

key takeaways

  • Users with leverage “might be at risk of liquidation,” Lido said
  • Lido revealed yesterday it would offer incentives for users to provide liquidity to its new Curve pool

Liquid staking protocol Lido warned that the swap rate between ether (ETH) and stETH — a token representing ether staked on Lido — has deviated from its one-to-one peg amid crypto market turbulence.

The protocol allows its depositors to use their Lido staked assets to gain a yield on top of their original staking yield.

But Lido said in a tweet Friday morning that stETH was trading at a discount of 4.2% to ETH on the main Curve pool.

The protocol noted that while long-term stETH holders and liquidity providers are not at risk, leveraged positions on stETH are.

“If you have a leveraged position, for example through Aave, you might be at risk of liquidation,” the protocol tweeted.

“You should urgently de-risk any leveraged positions that have a challenging health factor, for example, by adding extra collateral.”

ETH traded around $2,080 at 12:45 pm ET, according to Blockworks data. Meanwhile, stETH was at roughly $2,000.

Lido revealed yesterday it was deploying an additional Curve pool to improve the liquidity around the peg between stETH and ETH. The pool offers additional incentives amounting to one million Lido DAO tokens (LDO).

LDO was trading at $1.68 at 12:45 pm ET — up nearly 10% in 24 hours.

“We all know that there is no reward without risk; at the same time Lido works to maintain healthy integrations,” Lido wrote in a May 10 blog post. “In the event of a liquidation, collateral will be sold to cover the debt. To ensure that there is always enough liquidity on the market we perform liquidity sufficiency analysis using aggregated indicators.”

On Friday, following the resumption of the Terra blockchain for the second time, Lido announced that users could bridge bETH — a representation of stETH on Terra’s Anchor protocol — back to Ethereum. 

As holders flee Anchor and retrieve stETH, if they want to cash out to fiat currency, they must first sell stETH for ether, as major exchanges only list the native asset — not its staked derivative. 

Much of the bETH being swapped in Curve stems from liquidations of loans on Anchor that became undercollateralized, and was therefore acquired at a discount.

Macauley Peterson contributed reporting.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

recent research

Featured.png

Research

Helium stands at a pivotal moment in its evolution as a decentralized wireless network, balancing rapid growth, economic restructuring, and global expansion. With accelerated growth in domestic DAUs and Hotspots supporting its network, Helium is leveraging strategic partnerships and innovative proposals to scale internationally. The recent implementation of HIP 138, “Return to HNT,” has unified its token economy under HNT, simplifying participation and strengthening liquidity, while HIP 139’s phase-out of CBRS refocuses efforts on scalable Wi-Fi offload. Meanwhile, governance shifts under HIP 141 raise questions about centralization as Nova Labs consolidates control over the roadmap.

article-image

“Be prepared to do more with less,” Framework Ventures’ Michael Anderson said

article-image

Q1 may have been “frustrating,” but things are looking brighter for Q2

article-image

Tokens worth 20% of the current supply of the TRUMP memecoin launched by the president are set to be unlocked tomorrow

article-image

A crypto-industry lawsuit is “moot” now that Joint Resolution 25 has been signed into law

article-image

Fed Chair Powell assured markets that the labor market is in “good place,” dependent on price stability

article-image

As uncertainty reigns, the Philly Fed manufacturing index fell to a multi-year low, but layoffs have slowed