Risks and Opportunities of stETH - Ouyi & BlockBeats AMA Record

Recently, the unanchoring issue of stETH has attracted market attention. With the lessons learned from LUNA and UST, coupled with market turmoil, everyone’s fear of stETH unanchoring has become stronger. In order to sort out the core of the stETH issue, Ouyi OKX platform and BlockBeats invited dForce founder Yang Mindao, ResearchDAO researcher Scott, Zero X dry goods store member Gene, and Ouyi OKX coin-earning business sector Steven, trying to clarify the risks of stETH for everyone with opportunity.

BlockBeats: Let 4 guests introduce themselves briefly.

MinDao: I am the founder of DeForce. We mainly do stablecoins and lending in the DeFi field. We are also involved in staking as collateral, and today we are very happy to come here to share with you some of our observations on this event.

Scott: Hello everyone, thank you very much OKX for inviting me to Space tonight. Graduate students. In fact, I have been studying Bitcoin since 2016, and I have been an intern at a traditional financial research institute before. Later, I found that I still prefer Crypto, so I decided to continue to be a researcher in this industry after graduation. I am very glad that we will discuss the topic of stETH with you tonight.

Gene: Hello, thank you for inviting me, I am Gene, an early member of Zero X Dry Goods Store, and now I am also in charge of electronics in an organization business management. Before entering the industry, I have been working as a lawyer in the United States. I have crossed borders, but I have been practicing in depth. Now this time, stETH also has some business related with us. I am very honored to have the opportunity to discuss with you today. ,Thanks.

Steven: Thank you, host, hello everyone, I am Steven, and I am in charge of the financial services section of OKX, mainly in The trading platform provides you with some currency-based financial services, or currency-based wealth management services.

BlockBeats: Okay, let's start. Regarding stETH, Lido, the Ethereum 2.0 liquidity staking protocol, can deposit ETH to earn stETH, and stETH can lend ETH through AAVE, forming a circular upward layer of leverage. There was the incident of LUNA’s contract system as the beginning. The recent market downturn may lead to liquidation. Everyone has a bad feeling about these things, so today we will talk about the risks of this matter.

My first question: What do you think is the essence of stETH? Is there any difference from the last LUNA UST? Let's invite Teacher Mindao first.

Mindao: The difference between these two is actually very big. Everyone knows that UST itself is a stable calculation. It actually has a two-way adjustment mechanism, that is, if it is lower than 1 dollar and higher than 1 dollar, there is an algorithm, whether it is an over-collateralization type or an algorithmic type. Buy low and sell high, or sell high and buy low, through these two market forces to achieve anchoring. But stETH is actually a derivative product. It is now based on Ethereum 2.0's Staking, which is a synthetic asset made from the pledged proceeds. The bottom layer is to use Staking’s ETH to transfer to Lido’s platform. The Lido platform actually acts as a wholesaler. He will distribute ETH to the following cooperative node verifiers, and he will do the verification. , it will synthesize a stETH. So it is essentially a synthetic asset, not a stable asset.

The problem of a special mechanism in the synthetic asset market is that stETH is actually a one-way transformation in Ethereum 2.0, and Ethereum 2.0 has not yet The real Merge, you are now Satking into the contract, there is no way to reverse it, this is very different from the stable currency we just mentioned, the stable currency is a two-way. Stablecoins are regulated by the market. If the price is high, the market will often have selling pressure, and if the price is low, there will be buying orders to help it push up. So stETH is a one-way street, which leads to a problem: if its price is separated from its underlying type a assets, there is actually no mechanism that can essentially bring its price back.

So why is the matter of stETH attracting so much attention now? The main reason is that in the past six months, major lending agreements in the market have begun to accept stETH as collateral Things, and then we see that many users now use them as circular leverage. In fact, the logic of circular leverage is very simple, because most of the loan projects now use a mortgage rate of 70%. You take ETH to pledge in Lido, and then become stETH and then mortgage in, and Lido has always recommended about two points cost.

So The profit here is actually cyclical. Basically, there is no problem if you cycle 4~5 times, and it is relatively stable. In this case, ETH, for example, the interest rate of Lido's stETH, if it is 4.9, you can do 3 times and 4 times, and you can basically make a return of more than 15 points of ETH. Then one of the most important assumptions about the return is that stETH and ETH have an anchor. So we have seen that for such a long time in the past, the anchoring is actually relatively good, and they are all 1:1. However, recently, due to market fluctuations, the LUNA matter, including fluctuations in the liquidity of the entire market, will increase everyone's demand for liquidity, so some people may start to withdraw. In other words, some people are willing to buy it back to ETH as a hedge, and this will cause its price to gradually de-anchor.

What is another key reason? When the market itself fluctuates, the risk actually becomes higher, and everyone's requirements for asset returns also become higher. So what I said before, such as 1:1 anchoring, your return of more than 0.4%, may not be attractive enough for many people. I need a return of 10 points, so that you can only discount, for example, the price of 0.9599, 0.9 It is possible to generate such a high U, so this is also related to the risk rate of the market. Soin fact, all ETH-like staking derivatives in the market are deviating from the underlying asset price to varying degrees. I think this is not the essence. The essential problem is that the underlying assets of your assets have not changed, or ETH, the only change It is a change in the fundamentals of the entire liquidity.

LUNA’s own mechanism has caused it to be completely unanchored, and it is impossible to recover it from this level, and the bottom layer has no assets to anchor Yes, or it can be said that all its underlying assets have been arbitraged, so this is very different. Then we see that the bottom layer of stETH is 100% supported by ETH. Of course, we do not consider contract risks, including the risk of forfeiture when staking. So the bottom layer must be 100% ETH pledged on it at present, so they are still very different, two completely different products.

Scott: I agree with what Mr. Mindao said, and then I will add a few points. First of all, it is actually an internal shock brought about by the accumulation of internal risks, and then stETH is more of an external shock. To understand stETH, you first need to understand Lido, then you need to understand Curve, and then you need to understand the logic of the cycle belt of AAVE, so it is understood that firstly LUNA has difficulties, and then there are some previous judgments brought by LUNA, so in general It is said that it brought about the entire credit crisis.

The second point is the liquidity crisis brought about by the tightening of liquidity. One, almost 1/3 of the stETH pool may be used for a loan. Its volume is very large, and then institutions may see the redemption crisis. Some institutions may have been withdrawing funds from Curve some time ago, which reduces attack cost. So there is also a part of the reason that the institutions may be joining forces to do a sniper attack. When the decoupling reaches a certain level, it will actually bring some risk-free arbitrage opportunities to the institutions.

Gene: I would like to add that Mr. Mindao mentioned just now about Lido’s recommendation reward, which I understand should be 1%. It may be less for ordinary users, but institutions can apply through one of their governance platforms. They have an unlimited 1% return, but the return is in the form of Lido tokens. In fact, there was a decoupling earlier this year. At that time, it was because of being arbitraged. Everyone has been holding 1% and then decoupling this price. So this is the last time there was a decoupling price.

The second thing I want to add is that at the stage from 50% deviation to 60%, we observed that the cause of the matter was actually LUNA and UST. Several other institutions are not only LUNA's market makers, but also Lido's important liquidity providers. So at that time we observed that they had some stage of decoupling in UST. We were not sure whether it was because he was going to draw more liquidity for other places, or he predicted the crisis that might occur in the future. In short, we tend to think that It was they who started running. Because the pool was originally 500,000 at the time, almost a million ETH plus stETH were in the pool, and after they started running, they ran on one side, so the pool began to deviate from the original 50. When we deviated, we brought a wave of institutions and large households with a more sensitive sense of smell, and they also withdrew at that time.

The fluidity started to range from 50 to almost 64, and it was actually stable for a while. Then the starting point again is that there is an address. I am not sure that it is Alameda, but everyone is saying that the address is Alameda. Suddenly, more than 70,000 stETH ran away that day. This matter was discussed by many people on the chain. As you can see, the price has also shifted, and the liquidity has also shifted. After adding media fermentation, this matter began to become more subtle.

When this happened, one or two Twitter accounts broke the news that there was a problem with stETH. In fact, this question is a long story. Celsius has lost coins earlier, and now they actually form stETH with some of the current or withdrawn assets of users at any time. Then after the price shifted, this part of them suspected that Celsius had no way to withdraw, and cashed out this part of the liquidity in time, so of course it is correct in theory, and of course it is also correct in static view.

As soon as this matter fermented, everyone began to panic, because the news was that there were still 450,000 stETH mortgaged at that time, and then there were rumors in the market that Celsius was suspected of following When some institutions do OTC negotiations, the institution may not necessarily buy, but the opponent institution may run away first, so this style does sound like the style of some institutions. In short, it happened like this.

In just one day, more than 70,000 wallets suspected of being Alameda were sold, and Celsius moved about 40,000 and sold them on the chain Lost, they tried to hide their traces by depositing into FTX and then raising such an operation, but in fact Celsius did not have any large deposit pool in FTX during that time, so it was very easy to find out that the two of them were operating. After the exposure, things started to ferment. In the future, it is actually more familiar. Everyone has seen the Celsius crisis in various news, and even extended to a state where it is impossible to withdraw coins. This is actually the ins and outs of the whole thing. Of course, in the past few days, a lot of them have been running. I don’t think it’s mainly big institutions.

About the essence of this matter, I think that in layman's terms, it is actually caused by a cognitive illusion. This cognitive illusion is that everyone initially regards a low-liquidity asset, that is, a potentially low-liquidity asset, as a high-liquidity asset, which comes from the fact that it has been subsidizing customers before, so it will remain very stable for a long time The price is almost 1:1, and even for a while, stETH was more expensive than ETH, which means that a large number of institutions and individuals default to stETH as an asset that can be exchanged 1:1 at any time.

Since it is difficult to obtain the basic income of Celsius itself, the biggest beta comes from the pledge income of PoS, so it is obvious that so many financial institution platforms will provide Where does the income come from? Everyone went to stETH as they ran, and Celsius as they ran. I think this is also a process that is deduced step by step.

There is no problem in itself. This is a cognitive error. It is not a liquid asset that can be exchanged at any time. It relies on the liquidity provided by the market To obtain the so-called anchor price, then there will be two problems derived, one is the problem of term mismatch, where does the term mismatch occur? It appears on various wealth management platforms, so the most typical one is Celsius. I believe that many institutions actually have this situation, which is very reasonable, because everyone took it for granted at that time window and did not think about it. In other words, when you run, you don’t have such a time limit to replenish, and the problem is that everyone’s debt is a short-term debt, but your assets have entered a long-term locked state.

Another problem is the issue of leveraged pledges due to cognitive illusions. Leveraged pledges are also related to the interest discounts offered by some of our peers. Lido officials launched the so-called A shortcut to revolving pledges, Lido’s official Twitter also actively suggested that users can do this. I think this kind of behavior is actually quite controversial in my personal opinion. Obviously, you are asking everyone to engage in a rather risky thing. It was no problem when the liquidity was good, but you will find such a pledge behavior In fact, it is very dangerous. The most typical is that the two most dangerous positions in the entire market now come from Celsius. They should still have 100,000 positions. They have been dealing with this problem recently, and their leverage ratio is 69%. It is full, they all have a liquidation risk.

Steven: I think this matter may not have much to do with our ordinary retail investors, because this protocol was developed mainly The purpose is to make it more convenient for users to do pledge, because you want to do PoS Staking, you need 32 ETH, and then he found 7 operator nodes, and then made a label, so let everyone Make a pledge more conveniently.

Thisactually stETH is a long-term bond. When you actually merge, you can get back about 10% of your PoS profits. In this process, in order to expand its own market share and induce everyone to carry out revolving loans, the leverage is increased in disguise. Now that the Federal Reserve is constantly tightening, the liquidity is constantly running from the inside to the outside of the circle. When the price of ETH drops, various problems will come out, so I think this Things are also normal.

You may be more concerned about how I make a profit in it, or how I protect my assets in it, I think it may be two Two situations: In one situation, if you are ETH, and your volume is particularly large, you can do currency-based arbitrage, buy stETH at a relatively low price now and wait until you can put it back into ETH later. There will be more in the future. In another kind, you may just think about its interest, but you are not optimistic about the price of ETH at the same time. For example, if you think it will be lower in the future, you can do a hedging, holding the spot in one hand, and shorting ETH in the other. Then it is time to merge Then take interest. So basically it depends on everyone's confidence. I think that because it is essentially a different thing from LUNA, it is just a certificate-like agreement, so there will not be too much risk in this.

BlockBeats: Next, I want to discuss whether there is any problem with the Lido design mechanism?

Mindao: Yes, as mentioned earlier, there was actually an unanchor event in Lido, because the reason for the unanchor at that time was the recommended rebate Extremely high, so what problems can it cause? After everyone goes to stETH, customers who get reward points go to sell it into ETH. There are also two mechanisms, one is reward superposition, and the other is whitelist mechanism. That is to say, there is an upper limit for retail investors to mint stETH. If the institution has to do it, it will add a whitelist to it, so that you will not be allowed to mint coins in a cycle, so I think there is no problem with the actual mechanism of stETH.

In terms of operation and promotion, if you click in directly, you can go to it, and it will reward you. This so-called marketing expense mechanism for its marketing will cause it a big problem, that is, its volume will increase very fast. Well, including V God also said some time ago, whether it should be restricted at the mechanism level, the proportion of the PoS market is too large, and if a company is too large, it will have a great impact on the future security of the entire PoS Yes, if this platform collapses, it may have a great impact on the security of Ethereum. So I think there is no problem with its mechanism, but if it is too aggressive in this kind of marketing, it may have an impact on the entire network security of Ethereum.

Then we see that the promotion of so-called financial products is inevitable, why does it want to promote circular leverage? Because it is what DeFi should do, what did DeFi 1.0, 2.0 and 3.0 do? It is the improvement of capital efficiency. Continuously increasing leverage and continuously improving efficiency is the essence of DeFi and finance, so I think no one can prevent lending agreements from accepting these so-called c-type assets as collateral. So I don't think it's their problem. I think it's the optimization of capital in the market competition.

Now the Ethereum community has already proposed many proposals on how to limit the market share of these so-called extended assets. The community is also giving feedback on whether to limit it at the protocol level, and I personally feel that there is no problem in the mechanism. This is a self-owned market. To put it bluntly, you can do other projects without doing it. Many of these companies accept it as collateral, so things like circular leverage will definitely happen. Not necessarily a Lido problem.

At that time, I mentioned that there should be a limit on deposits, otherwise, if you use too much leverage in st, in fact, I personally feel that it is a risk to myself It may be even bigger, because you cause this kind of liquidation, and you may end up with a liquidation. If the liquidation is liquidated, the holder of the loan agreement will eventually cover it. So my personal feeling is that no matter how things develop in Celsius, how you sell st has no risk to stETH itself, it is an agreement. For the liquidity provider on the Curve flow pool, it is enough to fill the risk with funds, but I think the collateral damage of the surrounding agreements may be even greater.

Scott: I also think that I like the design of Lido very much, because when DeFi2.0 came out, you released 2.0 The purpose is to improve the capital utilization rate, which improves the capital utilization rate of the entire PoS to a certain extent. If there is a problem, it may be that it is mainly a problem of DeFi composability, which brings about a liquidity behind it that is finally clear, and then after the card is revealed, when it reaches a certain threshold, it will accelerate. The crash of the market. Everyone knows what your hole card is. As the current tightening of the entire liquidity situation, there are still so many external shocks, it will speed up the process, and then the leverage ratio before it is very high.

Gene: I quite agree with what Mr. Mindao said. In terms of its own mechanism design, what Lido is doing now is what it originally claimed to be doing, and then it does provide better liquidity to stakers. So without its liquidity subsidy mechanism, of course, the pledge can only lie there. In fact, the utilization rate of funds is even lower.

Then look at the whole thing now, of course we are all hindsight now, just talking about whether it was leveraged before. In fact, there is still no supervision or regulation in this market There are no external restrictions. Well, of course, as practitioners, we still need to consider these risk issues first.

I think it is quite controversial that Lido actively encourages everyone to cycle pledge. Yes, for example, the user who just got to know him may not necessarily know the stakes in it, but I believe that the project party should be very aware of the possible problems that may arise. Then it blatantly publicizes like this, especially when it cooperates with project organizations, or I don’t know if it has publicly said that I will encourage you, but they also promote each other, and you have a key to provide users with such s Choice. Objectively, if you take a look at a front end of stETH, you will find that if a user who does not have a lot of experience in stepping on the chassis, he may participate in it at the first sight, and then I can get a Relatively high returns compared to the market. You said that risks are disclosed, but do you say that everyone understands what kind of problems may arise in the middle? I believe there was no time at that time, and even now when some users are quitting, they will not be so sure or understand where my losses come from.

Then I think this is a complex financial derivative product, which will cause problems when it is wirelessly distributed to ordinary users, so I think it should be avoided, but I think There is nothing particularly wrong with the mechanism, including its design.

Steven: I may have a different point of view, I think there may still be a slight problem, but this problem is not with Lido , the problem lies in the current pledge method of ETH, there is no way for you to immediately redeem your earnings through PoS immediately. Also under the banner of Lido, in fact, there are many products on it, and there will be no problems with other types, because its node is because the income comes from your pledge on a node, and then the node can get rewards through fast output .

For example, like stSolana, its redemption time is about the same. If it is a small amount, you can directly redeem it through stSol, and if it is large, you can go directly to the chain. Unstake redemption, so once stSol is impacted, I can redeem it on the chain, and I can immediately form an arbitrage space to bring the price back. But if your ETH becomes stETH, it is equivalent to a perpetual bond. You don’t know when it can be merged, and then it may be half a year or two years later. There is no way to buy stETH and I will immediately go to the chain to redeem it, right?

And the other one is essentially to improve the efficiency of the use of funds, because you have so much money deposited in PoS, in fact, this is a bit like the Fed raising interest rates, After adding an interest rate, everyone like me will buy equity products, buy treasury bonds and buy asset products, and then the cost will be recovered if the liquidity is not enough, but the Lido agreement is born, it allows you to take back the recovered Part of the liquidity is released again, and this time is actually what Lido wants to do. Of course, some people think that there is a large-scale subsidy for the certificate that I want to issue. I saw the entire ETH pledge amount on Curve in November last year. In fact, it is still dominated by large investors. The data is that 44% of the users have a pledge of more than 10,000 ETH, and 35% have ETH between 1,000 and 10,000. If we look at the number of addresses, we saw that 0.69% of the users accounted for 79% of the deposits, so the protocol will attract more institutional users or users from large institutions. In this case, there is no way it can be redeemed into ETH. In another case of your liquidity and macro environment, including the leverage added in the early stage will lead to this kind of thing.

Blockbeats: After this incident is completely unanchored, what do you think is the worst outcome and the biggest impact?

Mindao: I think we discussed it just now, and I personally feel that the biggest source of risk does not come from Token of class st. The deposit volume of the entire Lido is about 1.5 billion U.S. dollars, which means that the current Curve pool is only about 600 to 700 million U.S. dollars. It means that its st and its own liquidity depend on Curve, and the so-called liquidation mainly depends on Curve. If you want to blame, I think it is because the risks in this area have not been well controlled, and the impact of lending companies may be greater.

I'm not that pessimistic in the worst case. The discount of stETH is 2-3%. I think this is very reasonable. Why does stETH say that everyone sees that the market is very hot, but the anchor is only 0.95. In fact, it’s not a big deal. 0.9 is not a big problem. What is the big reason why this problem is magnified? For example, if it falls to 0.82 or 0.8, it may cause many such loops on the Curve to be cleared, but this is only an assumption. But in the worst case, we can see that now there will be big players entering and leaving the market. Sanjian is sold today, and money may come in tomorrow, but it is still maintained at this level. You can think about it, we assume that the merger took place in August of this year, and the pledge can be released and redeemed within 6 months. Ethereum 2.0 also has a queuing problem, so let’s assume it’s only one year. If Ethereum is really held for a long time in that year, stETH is now bought at 0.95. For those who hold stETH or ETH for a long time is suitable.

So why do you say that in this market there will always be counterattacks from counterparties, and when you sell to a position, long-term holders will buy in. This is one of the reasons why I think it can’t fall sharply, that is, to sell a certain amount, because these people naturally want to hold ETH for a long time, so I personally feel that the buyer’s power is still very strong. It’s over after clearing those highly leveraged ones. The market is about to recover soon, and some people will definitely come back with arbitrage, because in a year’s time, I think many people’s estimates of the return on this thing are still very clear. For example, assuming that it is 2-3 points of ETH to return financial management, but actually go to Staking, Staking can actually be recirculated to return a high return, but the problem is that it has no liquidity, at least within this year. I think this is normal. In fact, if you look at some financial platforms in the traditional market, they get depositors’ money to invest in real estate and allocate some long-term assets. In the end, there is a problem with liquidity. In fact, this is the same. Personally, I don’t feel so pessimistic,I don’t think there is a so-called systemic risk to Ethereum or DeFi, it’s not at the same level as Luna at all, as far as st is concerned, the systemic risk to the Ethereum system is currently It's not that big of a stage.

Scott: Actually, I am not pessimistic at all. I have calculated the overall data, first of all, its continuous purchasing power It is because of its risk-free arbitrage opportunities. I am also doing some unsecured loans to some DeFi institutions, just pure credit loans. Their current unsecured loan interest rate is 9.5, which means that I need to pay 9.5 per year. Interest, calculate when the decoupling ratio reaches, I can get a risk-free arbitrage opportunity. First of all, the first income must be PoS, and there are some gas incomes. We think that first, stETH can obtain a 4% yield, and now it is decoupled by 5 points, that is, there is another 5 points of exchange income after exchange. If it falls further, I hold stETH with PoS income, my overall income is at least 14%, and my one-year risk-free credit loan only needs to pay a cost of 9.5, which will immediately generate a The opportunity to escape without risk will bring a steady stream of purchasing power, so its decoupling is supported by a certain reserve price. This is why I am not pessimistic.

Talking about the worst result, there are a lot of stETH mortgaged on Aave, so there are two ways for people who mortgage stETH, one is to bring USDT out, The second is to bring out ETH. I have also calculated that if you are worried about stETH, you should actually be more worried about ETH being liquidated, because the price of stETH is a ratio of the exchange that is processed by the price of ETH, and the liquidation of ETH will be earlier than stETH, so if If you want to worry about stETH being liquidated, you should worry about the market where ETH is liquidated.

Then the second situation is that I mortgaged stETH, the probability of being liquidated is even lower. According to some data, it can be seen that some institutions are liquidated at about 0.81, which is actually very low. At this time, institutions in the market, as well as long-term bank holders and regular investors, will definitely enter and make purchases, so I think the whole liquidation risk is nothing to worry about.

Then the worst result must be the plunge of Ethereum first, which will drive the price and liquidation of stETH, which is a relatively bad result. As for the second worst kind, the constant speculation makes it impossible for the organization to calculate how long it will take to lock in the revenue. The most important thing is to worry about these two directions.

Gene: Yes, the previous few actually talked about the point, in fact, the biggest problem now Not stETH itself, but the problem in this case.

AAVE currently holds 1.33 million stETH, and Curve has a total of 120,000 in the pool once a day, which is less than 10%. Of course, this 1.33 million does not mean that it must It will be sold, but you can look at it from this ratio. Even if you run away 40%, there are still 30% left on it. If you want to liquidate it, there will be problems. Of course, it will not all be liquidated. Well, in fact, Celsius also knows that at this time, he is already on the ship of st and has no way to get off the ship. He can only be forced to endorse the assets. LP may represent a temporary bad debt or a situation where liquidity cannot be realized, so this is a relatively bad situation as I understand it.

I also tend to think that the probability of being liquidated is very small, the reason is that you take a closer look at the customer's This function is also very interesting, it is its algorithm, now we see that the price changes very little, but if you buy 10,000 and sell tens of thousands, the price does not seem to change much, but if it is really below 0.8 or 0.9 , At that time, it may have a relatively large impact on the price if you buy a few thousand. So on the other hand, if you look at it statically, then there must be a problem with its liquidity now.

But if you look at it dynamically, the previous guests shared that a large number of potential buyers are actually waiting for opportunities there, some slowly This has been continuously accumulating. Many of the people who are buying recently are big players. I have seen a big player with 400,000 Ethereum lying in a wallet. So I think the possibility of decoupling for a long time, and the possibility of a relatively large decoupling is actually not great. Then look at the other side of the matter, who can liquidate it. In fact, it is very difficult to borrow stETH in the market, and the amount is not large. Take the pool away.

Of course, some users who already have st positions miss this thing. He wants to drive the market. big. Because you always have a purpose to make a profit when you bring down the market, so if you can't bring down the entire market, there is no possibility of making a lot of profit. So at least I think this is still relatively difficult, and at most it may be used as one of the means. If the market is extremely panicked and the data is relatively subtle, I think everyone can pay attention to this, but in the market there is not so much In extreme cases, it is actually very unlikely that this thing alone will lead the market.

Steven: I think all the teachers have said very well, the risk is not mainly on Lido’s side, I think if everyone has Only this stETH does not need to panic too much, it can be merged after all, and you can get your interest back. Then if you are currency-based, you don’t have to do anything to lie flat. Its relatively unanchored situation is actually more favorable for large investors or institutional customers, who can get more ETH chips through various arbitrage methods. Of course, they will compare themselves. For example, just now everyone It is said that PoS is about 4%-5% discounted, right? These institutional clients may have to weigh it themselves: What is my capital usage fee rate? Is it worthwhile to buy or sell? If it is worthwhile, there will be a lot of arbitrageurs who will bring back stETH, so I don’t think everyone needs to worry about this. .

BlockBeats: In fact, the four bosses are basically optimistic about stETH. It would not be said to bring down the entire ETH or the main market. In this event, what new opportunities are there? In fact, several bosses also mentioned some arbitrage methods in the front, do you have any new additions?

Mindao: When discussing risks, I actually thought of a potential risk, but this risk did not happen. That is, if its nodes go wrong on a large scale, it may lead to serious unanchoring. This is a bottom-level problem, and this does not mean that it is impossible to happen. Of course, everyone’s screening of the entire Lido design, including its underlying mechanism, is quite strict, and now it is basically voted by the community. In fact, many nodes here, including its early investors, are also big investors in ETH, so I don’t think there are too many problems in terms of security technology.

But it is indeed a very real problem, If there is a large-scale ring burst, I think it is most likely that there will be a slash at the bottom , and the slash of Ethereum should be very strict and ruthless in all PoS designs. I think it may be a bigger potential risk, but this risk has not happened now, so I think it is not reflected in the current market pricing.

You have already analyzed a lot of profit methods. If you want to enter now. For example, if you buy mainstream st assets in this area, you must buy stETH directly. Personally, I think it is relatively more cost-effective. In addition, I think there is another one that you just mentioned. In fact, many institutions can produce a lot of structural synthesis products for some customers at the current price of stETH 0.95, so I think there are indeed many opportunities in this point. So for retail investors, I think buying spot stock may be a good opportunity for st.

Scott: I agree with Mr. Mindao, first of all, you must buy st, if you are worried about not buying If the price is good, the simplest strategy is to invest in stETH regularly.

Gene: I think you can put up some price lists that you think are suitable. In fact, there are a lot of big ones like now Funds are buying, that is, batches and rhythms, and you can buy a little if you have nothing to do. Just like today's trading is very intense, yesterday's buys were bought down a lot, but there was another wave of buying immediately.

Then there is another point I mentioned just now. What everyone is trading now is an emotion, so if the market may slowly digest it from a relatively volatile situation, and at the same time approach From October to November, if things go well, the price exchange rate may be more optimistic at that time than it is now, and there is a certain profit expectation in the middle. If you buy when your emotions are extreme, it is also a relatively good choice to sell when your emotions are stable.

Steven: I think all the teachers said it was very good, and the first thing about slash may be less worrying , that is, one is early investment, and the other is a total of 7 node operators like theirs, including some well-known institutions that do infrastructure and companies that serve PoS nodes. The technical strength of these companies is relatively It is still relatively strong, so this point may not be considered as a particularly large risk point. Another thing, if you want to use ETH as the basis, I also want to get more arbitrage in the future. In fact, if you have a particularly large amount of funds, it is cost-effective to buy and sell. If you have a relatively small amount of funds, it is not worth it, the odds are relatively low, and the room for maneuvering is probably less than 10 points. So from this point of view, it is not very cost-effective.

BlockBeats: Thank you very much 4 Teacher, goodbye everyone.