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- Renzo's ezETH Unpegs to $688 After Conclusion of Airdrop Farming Phase
Renzo's ezETH Unpegs to $688 After Conclusion of Airdrop Farming Phase
Exploring the Impact and Implications of Renzo Protocol’s ezETH Depegging Incident: Insights, Analysis, and Trader Profits Unveiled in the Ever-Evolving Crypto Landscape
On April 24, Renzo Protocol’s EZETH encountered a momentary depegging, with its price plunging to $688 on the Uniswap decentralized exchange before swiftly bouncing back to parity with Ether (ETH). This anomaly, though brief, sent ripples through the crypto community, prompting analysis and speculation about its underlying causes.
The Culprit: Conclusion of Airdrop Season
The depegging incident is believed to have been triggered by a broader sell-off following the conclusion of Renzo Protocol’s Season 1 Airdrop. Pseudonymous crypto analyst Tommy suggested in an April 24 X post that users might have hurried to convert their EZETH holdings back into ETH to explore opportunities in other liquid restaking tokens (LRTs) or protocols.
“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 Protocol in Context
Renzo Protocol stands as the second-largest liquid restaking protocol, boasting a total value locked (TVL) exceeding $3.3 billion—a figure that surged by 126% over the past month. While Ether.fi takes the lead with over $3.9 billion in TVL, according to DefiLlama, Renzo Protocol’s prominence in the ecosystem remains undeniable.
The Perils of Depegging
This incident sheds light on a growing concern within the realm of liquid restaking tokens (LRTs). As noted by a prominent crypto 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.”
Impacts Beyond Renzo Protocol
The repercussions of ezETH’s depegging were not confined to Renzo Protocol alone. Leveraged protocols like Gearbox and Morpho Labs witnessed mass liquidations, with loopers—users leveraging LRTs repeatedly as collateral—bearing the brunt of the losses. This underscores the interconnectedness of the crypto ecosystem and the cascading effects of individual token movements.
Renzo’s Rising Fortunes
Despite the hiccup, Renzo Protocol has continued to attract attention, fueled in part by the addition of its incoming token (REZ) to the Binance launch pool on April 23. Simultaneously, the protocol announced its upcoming airdrop, allocating 10% of its token supply to Season 1 participants, further stoking enthusiasm within the community.
Trader Turns Depeg into Profit
Amidst the chaos of the depegging incident, one trader managed to capitalize on the volatility, turning a substantial profit in a matter of hours. Trader czsamsunsb.eth reportedly earned 121.65 ETH, equivalent to over $396,000, within a mere two-hour window following the ezETH depegging event.
“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!”
This remarkable feat underscores the potential for savvy traders to navigate and exploit market fluctuations to their advantage.
The depegging of Renzo Protocol’s ezETH serves as a poignant reminder of the inherent volatility and unpredictability of the crypto landscape. As the industry continues to evolve, incidents like these underscore the importance of vigilance, adaptability, and a nuanced understanding of market dynamics. In the face of adversity, opportunities abound for those bold enough to seize them, turning momentary setbacks into lucrative ventures.