The price drop experienced on Monday, June 13, had Celsius Network and stETH as protagonists. Could there be common ground?
Yesterday, Monday, June 13, the crypto world woke up to the news that Celsius Network, the cryptocurrency lending platform, had indefinitely halted all lending operations. withdrawals from its customers, to protect its community, as a way to ensure stability and liquidity.
The news was followed, almost immediately, by the Nexo purchase offer on Celsius Network, which was offered to absorb all or part of the debt, in exchange for also keeping some of the guarantees, such as the customer database.
On the other hand, stETH, a token derived from ETH staking in Lido, lost parity with Ether, due to massive sales, which dragged the price of Ethereum's native token to losses of up to 15%.
Could these two news stories be linked?
Celsius Network and the decoupling of stETH
Initially, the cause of the Celsius Network crash was attributed to poor management of user funds during the Anchor Protocol crisis.
However, some media have pointed out that Celsius could have about 445.000 stETH tokens, making it one of the main holders of the derivative token. The company could have exchanged the Ether deposited by its customers for stETH on Lido. Celsius Network's strategy would be to try to make its users benefit from the Ethereum 2.0 staking performance.
With stETH having lost parity with the original token and with the price loss of ETH, many Celsius Network users could have decided to withdraw their ETH tokens from the platform or exchange it for fiat money, which would cause greater losses to the network and also to the token.
This could be one of the reasons why Celsius has halted withdrawals from its customers, since the platform would not have enough liquidity to pay all Ethereum withdrawals.
Something similar happened yesterday with Binance, which temporarily halted Bitcoin withdrawals claiming that a blocked transaction was delaying all other transactions.
Furthermore, Celsius Network's terms and conditions state that “The user will not be able to exercise the property rights” about the digital assets you deposit on the platform. That is, the deposited cryptocurrencies do not belong to the users, but to the company.
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