Liquid Staking ETH and Price Correlations
Introduction to ETH Liquid Staking and this dashboard
- Lido Finance, RocketPool and Ankr, are Ethereum liquid staking providers that were founded after the Beacon Chain's inception with the goal of providing greater accessibility and liquidity to Ethereum PoS users.
- Lido Finance, RocketPool and Ankr created stETH, rETH and aETH respectively, all of which are ERC-20 tokens that ETH stakers can receive 1:1 for every 1 ETH staked through these liquid staking providers.
- Following the Shanghai Hard Fork, users can redeem 1 liquidity staking ETH:1 ETH.
- In this dashboard, we will first examine the relative prices of stETH, rETH, and aETH to ETH over time.
- Then, we will look for meaningful correlations that explain the volatility of these 3 liquid staking ETH.
- We can see that the rETH:ETH price ratio fluctuates the most over time, with the largest depeg occurring on the week of July 18th 2022, with a rETH to ETH ratio of 0.866.
- stETH has the second highest fluctuation level among the 3 liquid staking ETH. stETH began to depeg from ETH in early May 2022, with the largest depeg occurring the week of June 12th 2022, at a stETH to ETH ratio of 0.942.
- aETH, on the other hand, is the most stable liquidity staking ETH, only depegging from ETH once, on July 4th, 2022, at an aETH to ETH ratio of 0.988.
- The price of liquid staking ETH tokens have depegged the most between mid-June and mid-July 2022.
Table of Summary of Price of Liquid Staking ETH in relative to ETH
Liquid Staking ETH | Fluctuation and Volatility | Largest Depeg Date and Price to ETH Ratio |
---|---|---|
rETH (RocketPool) | Highest Fluctuation and Volatility | Week of July 18th, ratio of 0.866 |
stETH (Lido Finance) | Medium Fluctuation and Volatility | Week of June 12th 2022, ratio of 0.866 |
aETH (ANKR) | Lowest Fluctuation and Volatility | Week of July 18th, ratio of 0.866 |
- The line graph above shows the buying and selling volume of stETH, rETH and aETH on DEXes.
- We can see that for the majority of the days since January 1st, 2022, the buying volume of liquid staking ETH on DEXes has been almost identical to the selling volume of liquid staking ETH on DEXes.
- This rule outs the possibility of the depeg being caused by users selling more liquid staking ETH to the pool.
Let's take a look at some of the possible reasons why price of liquid staking ETH has depegged the most around the period of mid-June 2022 to mid-July 2022.
- Is this because users are selling more liquid staking ETH?
- Or are users withdrawing more liquidity from the liquidity staking ETH liquidity pools, leading to shallow/imbalance liquidity pools?
Let us now examine whether depeg in liquid staking ETH between mid June and mid July are due to users withdrawing more liquidity from the liquidity staking ETH liquidity pools
- The line graph above shows the number of providing removing liquidity transactions to/from stETH, rETH and aETH pools over time.
- From the end of April 2022 to the beginning of July 2022, the number of liquidity removals on liquid staking ETH pools far outnumbers the number of liquidity providing transactions.
- This suggests that users withdrawing liquidity from the liquidity pool caused the depeg of liquid staking ETH price from ETH, or the imbalance between ETH and liquid staking ETH in liquidity pools.
- This is fitting given that the market was bearish at the time due to the Terra attack incident and 3AC contagion.
- Users would prefer liquidity, the ability to swap to fiat in the shortest time possible, over additional yields by remaining in liquidity pools. This causes the depths of ETH liquid staking liquidity pools to be shallow, and the price of liquid staking ETH to depeg more easily.
- Furthermore, when liquid staking ETH starts to depeg from the price of ETH, the depeg of liquid staking ETH and ETH has resulted in users who provide ETH liquidity suffering from impermanent loss, causing liquidity providers to withdraw their ETH liquidity from the liquidity pool, increasing the pool's liquid staking ETH:ETH ratio even further, and the price of liquid staking ETH to depeg from ETH even further.
Conclusion
- Table of Summary of Price of Liquid Staking ETH in relative to ETH
Liquid Staking ETH | Fluctuation and Volatility | Largest Depeg Date and Price to ETH Ratio |
---|---|---|
rETH (RocketPool) | Highest Fluctuation and Volatility | Week of July 18th, ratio of 0.866 |
stETH (Lido Finance) | Medium Fluctuation and Volatility | Week of June 12th 2022, ratio of 0.866 |
aETH (ANKR) | Lowest Fluctuation and Volatility | Week of July 18th, ratio of 0.866 |
- Price of liquid staking ETH has depegged the most around the period of mid June 2022 to mid July 2022.
- The buying volume of liquid staking ETH on DEXes has been almost similar to the selling volume of liquid staking ETH on DEXes for the majority of the days since January 1st 2022. This eliminates the possibility that the depeg was caused by users selling more liquid staking ETH to the pool.
- Since end of April 2022 to early July 2022, the number of liquidity removals on the liquid staking ETH pools highly surpasses liquidity providing transactions. This suggests that the depeg of liquid staking ETH price from ETH, or the imbalance between ETH and liquid staking ETH in liquidity pools, was caused by users withdrawing liquidity from the liquidity pool.
- When users withdraw liquidity from ETH liquid staking liquidity pools, the pools' depths decrease, causing the price of liquid staking ETH to depeg more easily.
Input start_date
and apply to all visualizations.
Methodology
- The
ethereum.core.fact_hourly_token_prices
table is used to obtain the prices of stETH, rETH and aETH over time. - The default start_date of this dashboard is set to be ‘2022-01-01’.
- Liquid staking ETH depegs when its price deviates from ETH, and the greater the deviation, the greater the depeg.
i. Price of stETH, rETH and aETH in relative to ETH over time.
Sections in this dashboard
- Price of stETH, rETH and aETH in relative to ETH over time.
- Are depegs the result of users selling more liquid staking ETH?
- Are depegs caused by users withdrawing more liquidity from ETH liquid staking token liquidity pools, resulting in shallow/imbalanced liquidity pools?
ii. Are depegs the result of users selling more liquid staking ETH?
iii. Are depegs caused by users withdrawing more liquidity from ETH liquid staking token liquidity pools, resulting in shallow/imbalanced liquidity pools?
This dashboard was created by banbannard
Thank you for taking the time to read this!