Chaos Labs has been actively monitoring market conditions over the past 24 hours, conducting real-time risk assessments to ensure the ether.fi protocol remains secure. These market events serve as valuable stress tests for our systems, and analyzing user behavior during these periods helps refine our risk models. We’re sharing this preliminary analysis to provide the community with insights into how the ether.fi protocol performed during the recent market downturn.
Summary
A summary of our major findings over the past 24 hours are:
- The eETH peg maintained stability despite the ETH price crash. We’re encouraged by how effectively the current liquidity strategy preserved eETH price stability.
- With eETH primarily being used as collateral against WETH on Aave, the existing liquidity buffer has proven sufficient to handle withdrawals during ETH price downturns. While other factors may also drive withdrawal demand, users can take comfort in knowing that these market conditions typically result in minimal forced selling or withdrawal pressure.
- No significant increase in withdrawal activity has been observed during the recent market volatility.
- The small volume of liquidations on Aave indicates minimal forced selling of weETH. This should reassure holders that they can exit their positions efficiently without encountering disruptive liquidity events.
Risk Analysis
ether.fi has functioned normally across all tracked metrics. The sections that follow dive a little deeper into the major buckets of protocol risk.
Peg
The eETH peg has maintained stability throughout recent market volatility, staying within its expected trading range. With the ether.fi protocol’s withdrawal mechanisms functioning properly and sufficient liquidity available in the buffer, secondary market eETH prices have remained closely aligned with their peg value.
The most significant divergence over the past 48 hours reached approximately -40 bps, while the majority of observed deviations stayed below -15bps.
Withdrawals
Despite heightened market volatility, the etherfi protocol has demonstrated no significant spike in withdrawal requests. The withdrawal buffer has remained stable at 71.67k ETH to date.
DEX Liquidity
DEX liquidity for weETH remains at relatively high levels, totaling approximately 13.6k ETH across major pools.
| Chain | Pool | Exit Liquidity in ETH |
|---|---|---|
| Ethereum | Uniswap v3 weETH-ETH 1bp | 6.6k ETH |
| Ethereum | Uniswap v3 weETH-ETH 5bp | 2.4k ETH |
| Ethereum | Curve weETH/WETH-ng | 716ETH |
| Ethereum | Fluid weETH/ETH | 2.9k ETH |
| Ethereum | Total (Major Pools) | 13.6k ETH |
Liquidations
The distribution of borrow tokens against weETH collateral shows less than $85m is collateralized against stablecoins. This has resulted in significantly less forced selling from liquidations compared to other volatile tokens of weETH’s size. Throughout this market movement, only slightly over $1.1m in weETH supply has been liquidated.
