Renzo’s ezETH Depgs to $688 After Airdrop Farming Ends

On April 24, Renzo Protocol’s restaked Ether token (EZETH) experienced a depegging event, causing its price to briefly drop to $688 on the Uniswap decentralized exchange. The token quickly regained its price parity with Ether (ETH). This incident was likely a result of a sell-off following the conclusion of Renzo Protocol’s season 1 airdrop. Crypto analyst Tommy suggests that users wanted to convert their EZETH back to ETH in order to farm other liquid restaking tokens (LRTs) and protocols.

Renzo Protocol is the second-largest liquid restaking protocol, with a total value locked (TVL) of over $3.3 billion, which has risen by 126% in the past month. The largest liquid restaking protocol is Ether.fi, with a TVL of over $3.9 billion, according to DefiLlama. Unfortunately, similar depegging incidents have become a common problem for LRTs. According to the analyst, these incidents pose a risk to all LRTs, even if withdrawal is enabled, as the DEX pool can still depeg due to temporary imbalances.

The depegging event triggered mass liquidations on leveraged protocols such as Gearbox and Morpho Labs. Those who repeatedly use LRTs as collateral to borrow ETH for leverage, known as loopers, suffered the most significant losses. Despite this setback, Renzo Protocol has attracted increased interest after its incoming token (REZ) was added to the Binance launch pool on April 23, the same day the protocol announced its incoming airdrop. As part of the airdrop, 10% of Renzo’s token allocation was distributed.

One crypto trader, czsamsunsb.eth, made a substantial profit during the depegging incident. Within just two hours, they earned 121.65 ETH, equivalent to over $396,000. The trader spent 4,099 ETH to purchase 4,221 EZETH successfully, resulting in the significant profit.