Celsius Moves Nearly $800 Million in stETH from Lido: Preparing for Unstaking or a Restructuring Gambit?

The crypto world is buzzing with activity as bankrupt lender Celsius Network made a significant move, withdrawing a substantial amount of its staked Ethereum (stETH) from the leading liquid staking platform, Lido. This action, coinciding with Lido’s V2 protocol upgrade enabling withdrawals, has sparked speculation about Celsius’s next steps. Is the company preparing to unstake its ETH directly, or is this part of a larger strategy for its ongoing restructuring efforts? Let’s dive into the details.

Why the Sudden Move? The Lido V2 Upgrade

For a while now, users staking ETH through Lido have been eagerly awaiting the ability to withdraw their funds. Lido’s V2 upgrade, which went live on May 15th, finally made this a reality. This upgrade is a game-changer for the liquid staking space, allowing users to directly unstake their ETH. Prior to this, stETH, a token representing staked ETH on Lido, could be traded but not directly redeemed for ETH on the Beacon Chain through Lido itself.

This upgrade brought two key functionalities:

• Ethereum Withdrawals: Users can now directly withdraw their staked ETH from Lido.
• Staking Router: This enhances the protocol’s modularity and prepares it for future innovations.

The Whale’s Wake: Celsius’s Massive stETH Transfer

Just as the withdrawal gates opened, eagle-eyed blockchain observers noticed a significant transaction originating from Celsius’s wallets. On May 15th, a staggering 428,015 stETH, valued at approximately $781 million at the time, was transferred to a Celsius-controlled wallet designated for Lido-staked Ethereum. This substantial movement strongly suggests Celsius was anticipating the withdrawal functionality.

Adding further fuel to the fire, a smaller test transaction of 0.1 stETH was observed shortly after the large transfer. This is a common practice when dealing with significant amounts of cryptocurrency, acting as a confirmation and a way to test the process.

What’s Celsius Up To? Decoding the Potential Strategies

The big question on everyone’s mind is: why is Celsius moving its stETH? Several possibilities are being discussed within the crypto community:

Option 1: Direct Staking and Bypassing Lido

Simon Dixon, a prominent figure in the Bitcoin community and a Celsius creditor, suggests that Celsius might be aiming to stake its ETH directly. By removing Lido as an intermediary, Celsius could potentially save on the 10% staking commission that Lido charges. This would involve interacting directly with the Ethereum Beacon Chain.

Option 2: Leveraging Assets for Restructuring

Another compelling theory is that Celsius intends to use the unstaked ETH as collateral for loans as part of its ongoing restructuring plan. Having direct access to the underlying ETH provides greater flexibility in leveraging these assets to meet financial obligations and navigate the bankruptcy process.

Option 3: A Combination of Strategies?

It’s also possible that Celsius is pursuing a combination of these strategies. They might unstake a portion of their ETH for direct staking and use the remaining amount as collateral.

Celsius’s Previous Moves: A Glimpse into Their Strategy

This isn’t the first time Celsius has made notable moves related to its staked ETH. Just days before the Lido V2 upgrade, blockchain intelligence firm Arkham Intelligence reported a transfer of 40,928 ETH to a smart contract associated with Figment, another staking provider. This ETH was subsequently deposited into the Ethereum Beacon Chain deposit contract. This earlier transaction suggests Celsius has been actively managing its staked assets in anticipation of the withdrawal capabilities.

Lido’s Dominance and the Unstaking Queue

Lido remains a dominant force in the world of liquid staking. Currently, it manages a significant 29% of all staked ETH, totaling over 6.27 million ETH, with a market capitalization exceeding $11.3 billion. While the ability to withdraw is a welcome development, it’s important to note that there’s currently a queue for unstaking. On-chain analytics firm Nansen reports over 54,046 ETH waiting to be withdrawn. As of now, Celsius’s recent transfer is not included in this pending withdrawal count.

What Does This Mean for the Crypto Landscape?

Celsius’s actions highlight the evolving dynamics within the cryptocurrency staking ecosystem. The ability to freely move staked assets offers greater control and flexibility for large holders. For platforms like Lido, while they may see some outflows, the upgrade ultimately strengthens their protocol and enhances user trust.

Key Takeaways:

• Lido V2 unlocks withdrawals: A significant milestone for liquid staking.
• Celsius makes a massive move: Transferring nearly $800 million in stETH.
• Potential strategies for Celsius: Direct staking, collateral for restructuring, or a combination.
• Lido’s continued dominance: Remains a major player in ETH staking.
• Evolving staking landscape: Greater flexibility and control for stakers.

Looking Ahead: What’s Next for Celsius and Its stETH?

The crypto community will be closely watching Celsius’s next steps. Will they initiate a large-scale unstaking process? Will the unstaked ETH play a crucial role in their restructuring efforts? The answers to these questions will not only impact Celsius’s future but also provide valuable insights into the evolving strategies of major players within the decentralized finance (DeFi) space.

The movement of such a substantial amount of stETH underscores the importance of understanding on-chain data and the implications of protocol upgrades. As the cryptocurrency landscape continues to mature, these types of strategic maneuvers by large entities will undoubtedly shape the future of staking and DeFi.