Findings

• There are only 2 depeg events that went above 2% price deviation
  • February 22nd 2021 till March 29th 2021
  • May 9th 2022 and still ongoing (now is the 6.7.2022)
• There are no depeg events where the stETH value exceeded the ETH value

Lets take a closer look at the 2 major events now:

Correlation to Terra Collapse

May 9th 2022 is a date that everyone who has been into crypto recently knows. On that and the coming days one of the top 10 cryptos collapsed leaving a big gap in many projects that were connected to it.

This depeg is no exception: AnchorProtocol, a saving protocol powered by Terra V1 had billions of dollars worth of bETH (wrapped stETH) stored in it as collateral. As Terra began collapsing people rushed to get their funds out of the chain which includes the wrapped stETH on Anchor.

You can clearly see a huge spike in bETH outflows from anchor at the time the depeg started, leaving only a fraction of the previous amount of stored bETH on the platform.

Lido Finance

Lido is a staking pool for a whole bunch of cryptocurrencies

ETH Staking

With ETH working on merging the PoS beacon chain and the PoW mainnet users are already encourage to lock up their ETH in a ETH validator. While you can already earn rewards on your locked funds you are unable to redeem your ETH till the merge happens. Moreover you need at least 32 ETH to activate your own validator which is a lot for the normal user.

They deal with the complexities of running a validator and allow you to stake any amount of ETH, no mimimum required.

stETH

When you stake ETH in the lido staking pool you will get the same amount of stETH in return. All stETH holders will slowly accumulate staking rewards which can be claimed at any time.

With "the merge" still being a few months away there is no way to convert stETH back to ETH. Instead you can trade stETH on decentralized exchanges.

Given this it is possible for the stETH price to deviate from the ETH price. Large deviations are unlikely as the two tokens will be interchangable in the not so far future.

Lets get started

With all the terminology out of the way, lets get into it, shall we?

Lets start off with a zoomed out price comparison:

Both tokens are very similar in price most of the time. If you zoom in you can see smaller deviations but its hard to tell.

Instead lets take a look at their relative prices:

Correlation to Furucombo hack

Furucombo was a transaction-chaining tool used for optimize the gas expenses when interacting with several DeFi products at a time. On february 27th it was hacked with the attackers being able to steal $14M+.

Stealing 3900 stETH is a big deal as the total supply of stETH (Which is equal to the total value locked in the Lido staking pool) was less than 200k at the time. With over 4% of the supply being sold on curve the price got hit a bit.

The reason for it to take a while to recover is likely that there was very limited utility for stETH at the time. With it being integrated into more DeFi protocols over the coming months the peg was pretty stable overall.

At least until the next depeg event: