ETH Derivatives

Consider the liquid staking ETH derivates from ankr, rocketpool and lido(aETH , rETH and stETH ). What are some trends around the price volatility for these tokens? Swap activity?

Liquiding Staking and Derivatives

Many projects are turning to liquid staking to prevent tokens from being locked into a staking contract. This is achieved by creating a new token (derivative) while blocking the tokens in staking. By generating a new token, the user has more flexibility than with traditional staking, since it now has a token that can be invested in DeFi protocols or even be sold for other tokens. Be it from liquidity or loan protocols, it is possible to increase the user’s profitability with this token that is born from liquid staking.

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The Ethereum 2.0 upgrade entailed locking up the investor’s ETH for an uncertain period of time. Thus, Lido came up with a functionality that allowed the user to continue using its ETH. This feature was Lido’s liquid staking, which allowed users to earn the stETH token by locking up their ETH. These stETH could then be exchanged and invested in different protocols. There are other platforms such as Ankr and Rocketpool, which have their ETH derivative tokens (aETH and rETH respectively).

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This dashboard analyzes some trends around the price volatility of these three tokens during 2022.

Key Findings

Out of the three tokens, aETH is the one that has depegged the least during 2022. It is also the only token that has had a positive peg compared to ETH (very slightly above ETH’s price).
The peg of stETH held strong until May 11th. Since then, the price of stETH has always remained below ETH’s price, fluctuating between 2 and 4% below it.

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There is a correlation between the amount of ETH staked on Lido/Rocketpool and the price of stETH/rETH.

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During 2022, rETH has been the most volatile token amongst the three. The price of rETH is highly correlated to the number of transactions and active users in the Ethereum blockchain.

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The days that had the highest ETH deposits on Rocketpool seem to be those with peg spikes on rETH.

aETH:

Out of the three tokens, aETH is the one that has depegged the least during 2022.
It is also the only token that has had a positive peg compared to ETH (very slightly above ETH’s price).
The only remarkable depeg aETH had during 2022 was on July 5th, where it’s value decreased 5.1% compared to ETH’s price.

stETH:

The peg of stETH held strong until May 11th. This was because this was one of the craziest weeks in crypto history, due to the collapse of the UST stablecoin and Terra's LUNA governance token. LUNA, previously a top 10 coin by market cap, fell 99.9999% at a fraction of a cent, and UST, designed to hold at $1, went down to less than a cent in a matter of days. This situation created a lot of panic in the crypto market and most cryptocurrencies crashed around a 30%-60%. Since then, there has been a lot of fear in the market (especially for wallets with large amounts of funds). After seeing a stablecoin like UST go down, many coins suffered and many people sold their tokens. Since then, the price of stETH has always remained below ETH’s price, reaching an ATL (All Time Low) on June 18th of 6.3% compared to ETH.
stETH’s price recovered a bit since the ATL, but is still fluctuates between 2 and 4% below ETH’s price.

rETH:

During 2022, rETH has been the most volatile token amongst the three.
Even though it had some price peaks above ETH’s price (4.4% above on June 11th), it is below ETH’s price during most of the time. July 20th, was its ATL, where its price was 17.8% below ETH’s price.
The price of rETH is highly correlated to the number of transactions and active users in the Ethereum blockchain.

aETH:

The price of aETH follows the same trend as Ankr’s volume, stakers and deposits.
There is no clear correlation between any of the metrics diplayed above and the 5.1% depeg that ocurred on July 5th.

stETH:

After the decrease of the amount of ETH staked on Lido since May 11th 2022, the price of stETH depegged from ETH’s price. A couple days prior to the LUNA/UST crash, on May 2nd 2022, the total amount of ETH staked on Lido on that day (116.22k ETH) reached twice the amount staked during the past 4 months from now.
Low staking volume came hand to hand with fewer deposits and stakers. Despite this meaning that the supply of stETH increased slower, there was also a loss of interest for the token.

rETH:

In the same way as aETH with Ankr, there is also a correlation between the amount of ETH staked on Rocketpool and the price of rETH.
Also, when the median stake size on Rocketpool is high, the rETH depeg usually decreases.
Morevover, the days that had the highest ETH deposits on Rocketpool seem to be those with peg spikes on rETH.

Among the three tokens, rETH is the one with the most pools available to swap the token. However, the swap volume is lower than stETH’s.

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The volume started high at the beginning of 2022, and then it slowly decreased over time. However, August and September have grown in volume, swaps and unique wallets, mainly due to an activity increase in the rETH-WETH 500 10 liquidity pool.

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The depeg’s ATL of rETH on July 20th happened during a day of low volume, so there is no apparent correlation with this metric.

The swap volume of aETH (in USD) has been decreasing over time during 2022.

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However, this is proved to be due to the price of ETH going down, as the number of swaps and swappers has not decreased.

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On July 5th, the only swap done was on the WETH-aETH Curve liquidity pool, but this was not the reason behind the depeg, as the swap volume was low compared to previous volume spikes.

Two spikes show in the three charts: swap volume, swaps and swappers. These go from May 9th to May 15th and from June 10th to June 15th.

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As mentioned above, the first spike happened during the LUNA/UST crash, where most tokens went down in price significantly, and the market fear caused most users to swap their tokens to BTC, ETH or stablecoins (as these are supposed to be the least volatile assets).

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The second spike happened due to a big market crash, where ETH’s price went from 1.8k USD to 1k USD in a matter of days.

Conclusions

Out of the three tokens, aETH is the one that has depegged the least during 2022. It is also the only token that has had a positive peg compared to ETH (very slightly above ETH’s price).
The peg of stETH held strong until May 11th. Since then, the price of stETH has always remained below ETH’s price, fluctuating between 2 and 4% below it.

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There is a correlation between the amount of ETH staked on Lido/Rocketpool and the price of stETH/rETH.

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During 2022, rETH has been the most volatile token amongst the three. The price of rETH is highly correlated to the number of transactions and active users in the Ethereum blockchain.

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The days that had the highest ETH deposits on Rocketpool seem to be those with peg spikes on rETH.

Methodology

The data used in this analysis was collected by combining the information on the fact_hourly_token_prices, fact_transactions, fact_event_logs and ez_dex_swaps tables of the core schema of the Ethereum database.