Chaos Labs is paying close attention to the risk performance of ether.fi’s eETH and weETH over recent market volatility. Overall ether.fi has held up well over these unprecedented price movements, and continues to function safely.
weETH has traded close to its current exchange rate of 1.0446 to the price of ETH and has most recently fully returned to its normal trading range. Throughout the volatility, the primary market has continued functioning, limiting the extent to which its price has sustainably depeged. The functioning of ether.fi withdrawals is evident in the continued price reversion to its fair exchange rate.
As of 16h00 UTC weETH was the nearest to peg of active LRT tokens, trading within 80bps according to Coingecko.
Today has seen the highest number of withdrawal requests, and the second most withdrawals processed since launch. Over the past 24 hours, a total of 52,842 ETH in withdrawal requests have been submitted to restaking platforms, with 55% already processed, primarily on Eigenlayer.
A major reason ether.fi is able to service withdrawals without any issues is the significant liquidity reserves currently available for this purpose. There is 73 625 ETH in primary liquidity reserves, with 31 579 in the withdrawal queue, available in a few days, 23 658 in exited validators, and 59 015 ETH in the devamp contract which can be converted if needed. In total more than 124k ETH is currently withdrawable should it be needed.
In the secondary markets, there is currently 46 558 ETH (worth approx. $112m currently) worth of DEX liquidity in weETH pools. This can give weETH and eETH holders good assurances that they continue to be able to swap in and out of these tokens without major frictions.
DEX volumes have increased dramatically in ether.fi’s two main markets. Both Ethereum and Arbitrum weETH DEX pools have seen volumes of over 18x their TVL in aggregate. Liquidity is critical for maintaining orderly price action and events like this provide valuable stress tests to further refine liquidity strategies.
Almost 40% of weETH is currently in Aave. This is almost exclusively collateral against ETH-linked looping strategies, which are not subject to price risk given Aave’s pegged price adaptor oracle design. The implication is that price volatility like over the past couple of days does not result in mass liquidations and further forced selling.
No notable deleveraging is occurring, and weETH utilization in DeFi remains at 73.9%. Yield and farming protocols have experienced the highest outflow, with an aggregated 20,198 weETH withdrawn over the past 24 hours.
On a positive note, despite the recent market sentiment ether.fi continues to see fresh deposits. So far today over 10.2k ETH has been deposited into ether.fi as through this market stress test ether.fi continues to function as designed.