Over 440,000 Ethereum Added to Liquid Staking Derivatives in Two Weeks

May 13, 2023 Bitcoin.com

Ethereum’s Shanghai Upgrade is Live

April 13, 2023 The Crypto Briefing

Lido’s Staked Ethereum Token STETH Reaches $10.3B Market Capitalization, Ranks Ninth by Market Valuation

March 20, 2023 Bitcoin.com

Wormhole hacker moves $155M in biggest shift of stolen funds in months

January 24, 2023 Coin Telegraph

Wormhole hacker moves 5M in biggest shift of stolen funds in months

Coin Telegraph

Blockchain transaction history shows that the hacker transferred the funds onto a DEX and then went on to cycle funds around different DeFi protocols.

The hacker behind the $321 million Wormhole bridge attack has shifted a large chunk of stolen funds, with transaction data showing that $155 million worth of Ether (ETH) was transferred to a decentralized exchange (DEX) on Jan 23.

The Wormhole hack was the third largest crypto hack in 2022, after the protocol’s token bridge suffered an exploit on Feb. 2, 2022, that resulted in the loss of 120,000 Wrapped ETH (wETH) around worth $321 million.

According to the transaction history of the hacker’s alleged wallet address, the latest activity shows that 95,630 ETH was sent to the OpenOcean DEX and then subsequently converted into ETH-pegged assets such as Lido Finance’s staked ETH (stETH) and wrapped staked (wstETH).

#CertiKSkynetAlert

We are seeing address 0x629e… Wormhole Network Exploiter swap 95,630 Ether (~$155M) to stETH

Stay safe! pic.twitter.com/ZR6zxlRuKX
— CertiK Alert (@CertiKAlert) January 23, 2023

Digging into the transaction history further, crypto community members such as @spreekaway also highlighted that the hacker went on to conduct a slew of odd looking transactions.

For example, the hacker used their stETH holdings as collateral to borrow 13 million worth of the DAI stablecoin, before swapping it out for more stETH, wrapping into stETH again and then borrowing some more DAI.

Wormhole exploiter has converted his ETH to wstETH and is going to borrow DAI against it it seems. pic.twitter.com/9rhERSMG5u
— Spreek (@spreekaway) January 23, 2023

Notably, the Wormhole team has taken the opportunity to once again offer the hacker a bounty of $10 million if they return all the funds, after it left an embedded message conveying such in a transaction via the Wormhole: Deployer.

The hacker’s hefty ETH transaction appears to have had a direct impact on the price of stETH according to data from Dune Analytics. The asset’s price went from slightly under peg of 0.9962 ETH on Jan. 23, to as high as 1.0002 ETH the following day, before dropping back to 0.9981 at the time of writing.

With the Wormhole hack likely to catch more attention in light of the latest incident, blockchain security firms such as Ancilia, Inc. warned on Jan. 19 that searching the keywords “Wormhole Bridge” in Google is currently showing promoted ad websites that are actually phishing operations.

The community has been warned to be diligent on what they are clicking on relating to this term.

#phishing alert When you search "wormhole bridge" in Google, many of the "ad" entries are actually phishing site. E.g.
hxxps://wormholebridge-multichain.com/
hxxps://portaltoken-wormholebridge.com. Be careful about what you click and stay safe! pic.twitter.com/C6JW2xeaUh
— Ancilia, Inc. (@AnciliaInc) January 19, 2023

Quant Analytics Firm Warns of Potential Mass Sell-Off Event for Ethereum (ETH) – Here’s When

December 19, 2022 The Daily Hodl

64% of staked ETH controlled by five entities — Nansen

September 12, 2022 Coin Telegraph

Blockchain Analysis

New report by Nansen delves into the distribution of staked ETH, respective holders and possible ramifications as The Merge looms.

A report from blockchain analytics platform Nansen highlights five entities that hold 64% of staked Ether (ETH) ahead of Ethereum’s highly anticipated Merge with the Beacon chain.

Ethereum’s shift from proof-of-work to proof-of-stake is set to take place in the coming days after final updates and shadow forks were completed in early September. The key component of The Merge sees miners no longer used as validators, replaced by stakers that commit ETH to maintain the network.

Nansen’s report highlights that just over 11% of the total circulating ETH is staked, with 65% liquid and 35% illiquid. There are a total of 426,000 validators and some 80,000 depositors, while the report also highlights a small group of entities that command a significant portion of staked ETH.

Three major cryptocurrency exchanges account for nearly 30% of staked ETH, namely Coinbase, Kraken and Binance. Lido DAO, the biggest Merge staking provider, accounts for the largest amount of staked ETH with a 31% share, while a fifth unlabelled group of validators holds 23% of staked ETH.

Lido and other decentralized on-chain liquid staking protocols were initially set up as a counter-risk to centralized exchanges accumulating the majority of staked ETH, given that these firms are required to comply with jurisdictional regulations.

Nansen’s report stresses the need for Lido to be sufficiently decentralized in order to remain censorship resistant. Onchain data shows that ownership of Lido’s governance token (LDO) is concentrated, with groups of large token holders potentially carrying censorship risk.

“For example, the top 9 addresses (excl. treasury) hold ~46% of governance power, and a small number of addresses typically dominate proposals. The stakes for proper decentralization are very high for an entity with a potential majority share of staked ETH.”

Nansen also concedes that the LIDO community is actively seeking solutions to the potential risk of over-centralization, with initiatives including dual governance as well as a legally and physically distributed validator set proposed.

Given the ongoing slump in cryptocurrency markets, the majority of staked ETH is currently out of profit - down by ~71%. Meanwhile 18% of all staked ETH is held by illiquid stakers that are in-profit.

Nansen suggests that this category of stakers is the most likely to sell their ETH once withdrawals are enabled at the Shanghai upgrade. Fears of a major sell-off at The Merge are unwarranted, though, as ETH withdrawals will only be possible six to 12 months after The Merge.

“Even then, not everyone can withdraw their stake at once as there is an exit queue in place for validators similar to the activation queue of around six validators (usually 32 ETH each) per epoch (~6.4 min).”

Nansen notes that if all validators withdrew their staked ETH and stopped being validators, this would take around 300 days with over 13 million ETH staked.

The blockchain and analytics platform announced the launch of a new research and education arm alongside its Merge report, aimed at marrying its on-chain data analytics with masterclasses and research papers. Nansen Research Portal will also publish industry-expert research reports from various partners in the blockchain and cryptocurrency industry.

30% of Today’s Staked Ethereum Is Tied to Lido’s Liquid Staking, 8 ETH 2.0 Pools Command $8.1 Billion in Value

September 11, 2022 Bitcoin.com

Ethereum staking service Lido announces layer-two expansion

July 19, 2022 Coin Telegraph

Coin Telegraph

Lido Finance has announced plans to offer its ETH staking services across the entire L2 system, as long as specific networks have “demonstrated economic activity.”

Crypto staking service provider Lido Finance has announced plans to expand staked Ether (stETH) support across the ecosystem of Ethereum Layer two (L2) networks.

In a July 18 blog post, the Lido team noted that it would initially begin by supporting Ether staking via bridges to L2s using wrapped stETH (wstETH). Moving forward, it will eventually enable users to stake directly on the L2s “without the need to bridge their assets back” to the Ethereum mainnet.

In terms of partnered L2s, the team stated that before the announcement, it had already integrated its bridged staking services with Argent and Aztec. It added that the next collection of partnerships and integrations would be unveiled over the next few weeks.

Once the fully-fledged L2 staking support is ready, the Lido team noted that it will first start with L2 heavyweights Arbitrum and Optimism before expanding out to other L2s that have sufficiently “demonstrated economic activity.”

Given that L2s are designed to reduce the cost of Ethereum transactions, the team touted this move will enable users to stake ETH with lower fees while also gaining “access to a new suite of DeFi applications to amplify yields.”

“There are several types of L2s. We believe that in the future, a large portion (if not a majority) of economic activity and transaction volume will migrate to both general use and purpose-specific Layer 2 networks.”

“Each of these networks will benefit from or need staking solutions to support their users’ economic activities and ensure that all users of Ethereum ecosystem networks have the ability to participate in securing Ethereum,” it stated.

According to Lido’s website, it currently has more 4.2 million ETH staked on the platform which is worth around $6.5 billion, making it one of the largest providers in terms of total stETH value and second overall in terms of total value locked (TVL) in decentralized finance (DeFi) platform.

Lido provides staking rewards on a host of other assets, including Solana (SOL), Kusama (KSM), and Polkadot (DOT), but is primarily used for its ETH staking services, which offer annual yields of around 3.9%.

Once a user deposits their ETH into the platform, a tokenized version of their deposit is then minted as stETH, which can be used in other borrowing or yield services from other DeFi protocols.

stETH is pegged at an intended ratio to ETH of 1:1. However, the peg famously fell off to represent 0.95 of 1 ETH in May during the aftermath of the $40 billion Terra ecosystem collapse.

The depegging of the asset poses limited risks to long-term hodlers and stakers. However, it runs the severe risk of causing liquidations for anyone who takes out leveraged positions against the asset. Now defunct firms such as Celsius Network and Three Arrows Capital have been reported as significant users of stETH.

At the time of writing, the peg is sitting at the correct ratio, with Lido offering a 1:1 exchange for ETH and stETH. However, partnered decentralized exchange aggregator 1inch is also offering a 2.36% discount to mint stETH, suggesting that depositors can currently get back more stETH value than the amount of ETH they deposit via 1inch.

Staked ETH