Celsius Retrieves $410m In Collateralized ‘stETH’, Formerly Used For Liquidity Issues

Celsius Drops Its Aave & Compound Debt to $123 Million, Pays of $113M in 24 Hours
Source: HiperTextual

The ongoing DeFi industry turmoil is beginning to resolve after the DeFi lending giant, Celsius recently paid off over $81 million in debt to Aave and reclaimed $410 million of its staked ether (stETH). Celsius, which became the epicenter of the series of DeFi lending platforms’ downfall is finally getting closer to fully settling its liquidity issues. 

According to Etherscan data, Celsius sent $81.6 million worth of USDC to the decentralized lending protocol, Aave, further paying a considerable amount from its $90 million debt. Following this, Celsius reclaimed $410 million in stETH. However, at press time, the lending platform still owed the combined amount of nearly $59 million to both, Aave and Compound finance.

Source: Nansen

What Happened With Celsius? 

Last month, Celsius’ announced that they were halting withdrawals, swaps, and transfers between accounts due to liquidity issues. This in turn triggered a domino effect in the crypto lending space with panic withdrawals across platforms, forcing companies to temporarily suspend withdrawals, and freezing user funds. 

Celsius noted in its public announcement that “due to extreme market conditions” they were “pausing all withdrawals, Swap, and transfers between accounts”, in order to “put Celsius in a better position to honor, over time, its withdrawal obligations”. Post the announcement, Celsius network’s native token, CEL witnessed a mass sell-off, plummeting more than 54% overnight, currently standing at $0.73. 

Following the liquidity issues, the platform had to collateralize a large chunk of its stETH, after which the ETH to stETH ratio charts witnessed discrepancies. It is important to remember that Celsius is a huge holder of stETH, further being the largest holder of interest-bearing stETH (stETH on Aave). Given this, it was blamed for the stETH token losing its 1-to-1 peg to ether. 

Source: tradingview

LIDO, the “liquid staking” service provider defined the stETH to ETH ratio — “stETH [SETH] is backed by ETH (on the beacon chain), and the market is now starting to realize the fair price for stETH [SETH]”.