Some top LSTs have previously seen price deviations of up to 77% from Ether’s price due to mass sell-offs paired with liquidations on leveraged lending protocols.
The $45 billion liquid staking sector is raising concerns among investors over the long-term price stability of cryptocurrencies tied to these protocols.
Liquid staking creates more capital efficiency for investors by offering an equivalent of the initial staked token that can be deployed in other decentralized finance (DeFi) applications.
However, liquid staking tokens (LSTs) could temporarily lose their price peg to Ether (ETH), according to Carlos Mercado, a data scientist at Flipside Crypto research firm.
