The recent withdrawal of 428,000 staked Ethereum (stETH) valued at $780 million by the bankrupt crypto lender Celsius Network has raised some eyebrows. This notable move coincides with the introduction of a new withdrawal feature by Lido Finance, a liquid staking solution for ETH 2.0.
It is speculated that the massive withdrawal could potentially be an endeavor to liquidate assets in order to reimburse customers or creditors amid ongoing bankruptcy proceedings. It is essential to note that Celsius Network has not entirely moved all of its stETH; however, it did remove 0.1 stETH from Lido just hours after enabling withdrawals. This could indicate the firm’s interest in testing the withdrawal process or familiarizing itself with the platform’s functionality. On the other hand, Lido’s version 2 upgrade allows stETH holders to withdraw their Ethereum at a 1:1 ratio.
In the context of a proof-of-stake (PoS) network, stETH represents Ethereum that has been staked. PoS participants can stake their ETH by locking it up in specialized smart contracts called staking contracts, thus contributing to the network’s security and consensus process. As a result, participants are duly rewarded with newly minted ETH.
Celsius Network previously employed a strategy that involved staking ETH received on its lending platform with Lido Finance to attain stETH. This allowed Celsius Network to utilize stETH as collateral on DeFi platforms, generating additional yield on their customers’ funds. Collaborating with Lido Finance provided a capital-efficient solution for Celsius Network and its users.
Unfortunately, the company encountered liquidity issues in mid-last year and filed for bankruptcy, which made the conversion of their stETH holdings back to ETH quite challenging. This was due to Curve, the main exchange offering stETH trade, lacking sufficient funds to facilitate swaps back to ether without significant slippage.
However, with the new withdrawal feature now accessible on Lido, Celsius Network’s chances of recovering its ETH and possibly returning it for continued restructuring work have significantly increased. As always, it is crucial for investors to carry out comprehensive market research before investing in cryptocurrencies to minimize personal financial losses.
Source: Coingape
