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The collapse of TerraUSD (UST) caused the “infection” of the stETH token issued by the Lido Finance service, increasing systemic risks. This conclusion was made by analysts at Goldman Sachs writes CoinDesk.
Lido allows you to deposit an arbitrary amount in ETH to make a profit from staking on the Ethereum 2.0 network. In return, users receive stETH tokens that provide liquidity to the invested assets. Coins can be used in other DeFi protocols.
StETH holders could exchange tokens for bETH in the Anchor Protocol in the Terra ecosystem and receive rewards.
What is Terra (LUNA)?
Terra’s problems resulted in a 4.5% discount on stETH over ETH. At the time of writing, it has dropped to 2%, according to CoinGecko.According to DeFi Llama, the TVL project is $ 8.85 billion Shortly before the collapse of Terra, the figure was $ 19.35 billion.
Data: DeFi Llama.
“This event is difficult to overestimate. Lido is deposited with a third of all Ethereum in staking. The situation clearly illustrates how The composability of DeFi can increase systemic risk.” — experts emphasized.
Recall that due to the collapse of the Terra ecosystem, the non-profit organization Avalanche Foundation lost $ 60 million.
As part of the joint work, Luna Foundation Guard and Terraform Labs invested $ 200 million in AVAX, the first acquired tokens during an over-the-counter transaction for UST, the second exchanged them for LUNA cryptocurrency. The assets were to be used to stabilize the Rate of TerraUSD.
Earlier, Forbes called the collapse of LUNA and UST the “fifth reset” of the crypto market.
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