• Analyze the price of stETH in ETH denomination and find meaningful correlations that explain its fluctuation.
• Possible correlations could be:
  • ETH’s price in USD.
  • Volume in the curve pool,
  • Curve stETH/ETH pool composition

Task

Intro

Ethereum along the whole cryptomarket is currently in a downward trend, with it, staking and swapping actions have affected the whole ethereum ecosystem. Part of those affected is stETH and its provider Lido.

Lido stakes ETH in exchange for a yield return, to participate users delegate their eth and in return they receive stETH on a 1:1 ratio.

Once staked the ETH provided cant be unstaked until ethereum 2.0 comes out.

Method

• To find prices i used Flipside's ethereum.core.fact_hourly_token_price table.
  • WETH will be used as ground price for ETH.
• To find the swapping activities i used Flipside's flipside_prod_db.ethereum.dex_swaps table.
• Finally to find the stETH staked in curve i used Flipside's flipside_prod_db.ethereum.erc20_balances .

Analysis

• The start of may was particularly bumpy with only the first days upping in value for a steep decline, further deepened by LUNA sunking and taking much of the trust in the space in a few days.

• The biggest movements in price this last month are gonna reflect in the other types of transactions involving stETH.

• Since May, 12th, stETH and WETH price had widened the gap on their prices, with stETH remaining lower than WETH

• Swaps have also followed price movements, with swaps to both ways responding according the new levels where price is settling.

• For example when price appears to settle swappings directed to stETH grow, reflecting trust in the future and network.

• In similar way, when price failed to reach a new high in May, 21 for example, a huge increment in swaps to ETH grew. Signaling at least the intention of moving around that ETH.

• In the last days according as expected in volatile movements, there has been an increment in swapping activities, both for stETH and ETH.

So whats going on?!

• As expected, reflecting crearly the effect of price movements when mixed with trust in future positive days, we can see that the stETH in the Curve Pool has decreased along ETH price movements.

• Considering that stETH is an extension of the trust in the price (for the apy % from staking), is to expect a positive correlation between ETH price and stETH being staked.

• I'd say without making the exact math, that there is a positive correlation between price movements and trust.
• This trust can be evaluated as a convoluted product between price movements and price projections.
• When it appears that a bottom is being reached and price can go up, there is a positive influx of stETH staking.
• But when a negative price actions is on the horizon, stETH loses its ground and the sentiment goes to have more liquid assets.
• I would expect stETH price, and staking to keep diminishing as long as ETH price doesn't get to a solid price level.

Considerations

• It would be interesting to see if the gap between stETH price and ETH is creating arbitrage opportunities, and if this are being taken.