Alameda Research, famous for the crypto investments and prowess in escaping market dips, recently exited its stETH position on the Lido pool. The price of stETH had deviated from ETH in the staking pool, and the investment company quickly closed its positions before extreme losses could be incurred.
Due to market volatility and lack of liquidity, the spread between stETH and ETH was getting wider. At a point, the staked ETH on Lido pools traded at a 5% discount. Within a few hours of noticing the price discrepancies, Alameda Research sold off 50,000 stETH, worth over $70 million.
How Alameda Research’s selling Off Affected the Celsius Network
Celsius has also invested in Lido pools. Unlike Alameda, Celsius failed to close its staking positions on time. The massive selloff by Alameda further reduced liquidity in the pool, affecting the spread between staked Ether and normal Ether.
The Celsius Network has struggled with harsh market conditions, affecting investors. Celsius is similar to a crypto hedge fund. Since the protocol’s inception in 2018, the network has served as an all-in-one bank for crypto users. The network invests in other DeFi pools and shares profits with investors.
Although the protocol performed well in 2020 and 2021, when crypto bulls were in control, they find themselves choked with losses at the moment.
Celsius invested in UST, hoping to make some profits from staking and then reward investors in turn. However, the narrative did not go as planned, and the network allegedly lost $500 million in the crash. The protocol also fell victim to the BadgerDAO hack. Although they did not report the amount lost during the hack, a few sources claim the network lost more than $50 million to the hack.
Currently, Celsius has $1.2 billion in debt to pay to AAVE. The quickest bailout option for the protocol is an acquisition, as they already have a long list of unpaid crypto loans. Interestingly, Nexo has proposed to buy the network. Celsius community members will be alert to see how things play out.