Following the temporary depegging incident of Renzo Protocol’s restaked Ether token (EZETH) on April 24, its price briefly dropped to $688 on Uniswap decentralized exchange.
However, despite this setback, a trader managed to earn nearly $400,000 in profit. The token later regained its price parity with Ether (ETH), according to Dexscreener data.
Depegging Incident Affects Renzo Protocol Following Airdrop Conclusion
According to crypto analyst Tommy, the depegging incident affecting Renzo Protocol’s restaked Ether token (EZETH) on April 24 was likely triggered by a broader sell-off after the conclusion of the protocol’s season 1 airdrop. Users sought to convert their EZETH tokens back to Ether (ETH) to participate in farming other liquid restaking tokens (LRT) and protocols.
Renzo Protocol, ranking as the second-largest liquid restaking protocol, boasts over $3.3 billion in total value locked (TVL), marking a 126% increase over the past month. Ether.fi, the largest liquid restaking protocol, surpasses Renzo with over $3.9 billion in TVL, as reported by DefiLlama.
However, such depegging incidents pose a growing concern for liquid restaking tokens (LRTs), exposing them to risks even when withdrawal options are enabled. The imbalance in decentralized exchange (DEX) pools can lead to temporary depegging events, as noted by the analyst.
The repercussions of the depegging extended to leveraged protocols like Gearbox and Morpho Labs, resulting in mass liquidations. Loopers, users leveraging LRTs as collateral to borrow ETH, bore the brunt of the losses in this scenario, according to the analyst’s observations.
Despite the challenges, Renzo Protocol has garnered increased attention following significant developments. On April 23, the protocol’s incoming token (REZ) joined the Binance launch pool, coinciding with the announcement of an incoming airdrop. Renzo allocated 10% of its token supply to the season 1 airdrop, further fueling interest in the protocol.
Trader Scores $396,000 Profit After Renzo Depegging Incident
According to on-chain intelligence firm Lookonchain, crypto trader czsamsunsb.eth managed to secure a profit of 121.65 ETH, equivalent to over $396,000, within a mere two hours following Renzo’s depegging incident. The firm highlighted this accomplishment in an April 24 X post, detailing the trader’s swift and lucrative move in response to the EZETH (Renzo Restaked ETH) depegging event.
Czsamsunsb.eth trading history. Source: Lookonchain
Reportedly, czsamsunsb.eth utilized 4,099 ETH to purchase 4,221 EZETH successfully during the tumultuous period of depegging. This strategic maneuver ultimately yielded the trader a profit of 121.65 ETH within the short span of two hours, showcasing the potential for swift gains in the volatile crypto market.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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