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Token at the Center of Crypto Storm Becomes Arbitrage Target

  • Ethereum bulls see discounted stETH as an arbitrage trade
  • But risks like potential ‘liquidation cascades’ still remain
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An arbitrage opportunity appears to be emerging already from the latest crypto meltdown, with traders pointing to the price disparity between Ether and a version of the second-largest digital-asset that has been at the center of the recent turmoil.

The token, stETH, represents staked Ether on the Ethereum blockchain and counts troubled crypto lender Celsius and hedge fund Three Arrows Capital as major holders. Since its launch by decentralized app Lido Finance in late 2020, stETH has become one of the most popular collateral assets for lending and borrowing in DeFi. But the recent market illiquidity and stETH’s worsening discount to Ether’s price has now made it the focal point of critical market chatter.