Massive staked Ethereum withdrawals by whales allow arbitrageurs to profit

Hull Invest

Lido (LDO) staked Ethereum (stETH) trades at a discount to Ethereum (ETH) on Curve after whales remove 84,131 ETH ($101 million) from protocol, arbitrageurs profit from this situation can now be obtained.

Peckshield also reported that whales withdrew 42,400 stETH from Aave.

Lookonchain reported that the MEV bot arbitraged 104 ETH ($124,800) out of this situation. According to our on-chain analysis, bot transactions take the form of:

“MEV Bot uses flash loans to get 8,000 WETH from 0x2718. His exchange path is 8,000 ETH → 8,272 stETH → 7,537 wstETH → 8,104 WETH.”

Another trader, Mandalacapital.eth, is coveting stETH on Aave with plans to profit after stETH/ETH returns to the peg. The trader deposited 4,513.70 stETH into Aave and borrowed 3,193 ETH. We then exchanged the borrowed ETH for 3,258.46 stETH and borrowed again to increase our long leverage.

In another case, the address exchanged 2000 ETH for 2,053.48 stETH at a rate of 0.974. This means that you can later redeem it for ETH. This means a profit of 53.4 ETH.

Following Terra’s implosion in May, stETH/ETH depeg caused massive market volatility and liquidity issues, impacting bankrupt crypto firms such as Celsius and Three Arrows Capital.

Data from CryptoSlate shows that ETH is currently trading at $1,196, up 2.8%, while stETH is worth $1,172, up 2.4%. The stETH-ETH peg is 0.9817.

Wrapped Bitcoin Depeg

Data from Tradingview shows that Wrapped Bitcoin (WBTC) has been unpegged for over a week. According to the chart below, WBTC lost parity with Bitcoin (BTC) on his November 13th, dropping to 0.9990.

wrapped bitcoin
Source: Trading View

Since then, the chasm has widened and dropped to 0.9774. Wrapped Bitcoin is an ERC-20 token. This is his 1:1 representation of BTC on the Ethereum blockchain network.

depeg risks 235,000 WBTC as arbitrageurs may take advantage of the situation.

Meanwhile, Glassnode data shows that WBTC supply has fallen by 50,000 since May 2022, when the Terra LUNA crash rocked the industry.

Wrapped Bitcoin Supply
Source: Glassnode

According to CryptoSlate data, WBTC is trading at $16,573 while BTC is trading at $16,634.

Posted In: Ethereum, Analysis

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