Celsius Withdraws $781M in stETH from Lido: Strategic Move or Risky Gamble?

Celsius removing massive funds from Lido, twilight sky backdrop, Ethereum tokens in motion, high-stakes chess game, air of uncertainty and risk, dramatic lighting illuminating the strategic plays, on-chain data trails, muted colors reflecting mood, intertwined with artistic blockchain elements, balance of potential profit & vulnerability.

Embattled crypto lender Celsius seems to be wasting no time in shifting its Ethereum staking tokens from liquid staking platform Lido, which has recently enabled withdrawals. On May 15, a transaction involving 428,015 stETH (Lido staked Ether) was identified on Celsius wallets, transferring to the Lido staked Ethereum wallet. Valued at $781 million during the time of transfer, some speculate this move is in preparation for withdrawal. Following this transfer, on-chain data suggests that Celsius performed a test withdrawal of 0.1 stETH a few hours later.

Simon Dixon, a Bitcoin pioneer and Celsius creditor, suggested that Celsius might be “lining up for staking directly without Lido in the middle.” Dixon also mentioned that the transferred amount could serve as loan collateral for Celsius’ restructuring plans. The matter is scheduled for an update during a court hearing on May 17.

Further analysis by blockchain intelligence firm Arkham Intelligence indicates that Celsius transferred 40,928 ETH last week to a smart contract called “Figment ETH2 Beacon Depositor 1”. This amount was then moved to the Ethereum Beacon Chain deposit contract on May 12, as per Etherscan data.

Lido, which takes a 10% staking commission, enabled withdrawals on May 15 with a protocol upgrade to V2. According to Lido, V2 introduces two major components, with the most user-facing aspect being Ethereum withdrawals. This new feature allows Ethereum stakers with Lido to directly unstake ETH through the protocol. Currently, Lido accounts for 29% of all staked Ethereum or 6.27 million ETH valued at around $11.3 billion.

On-chain analytics firm Nansen reports that 54,046 ETH are already in the withdrawal queue, though this figure does not yet include the Celsius stash. In light of these recent events, some questions may arise surrounding Celsius’ reasons for moving such a significant amount of stETH from Lido, as well as the potential consequences this withdrawal may have on the staking platform.

As we await further details on this development, it is essential to consider both the strategic advantages and the risks associated with Celsius withdrawing from Lido. While it may allow the crypto lender to stake directly without Lido’s intermediary role, thus maximizing profits, it could also expose Celsius to potential security risks, given the company’s recent challenges. Moreover, this move could significantly impact Lido’s staking dominance, leading to potential ripple effects across the Ethereum staking landscape.

Source: Cointelegraph

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