In response to the widespread fear and uncertainty caused by the recent large depeg of ezETH, the Renzo protocol has reversed its stance on tokenomics and airdrop.
A liquidation involving more than $60 million occurred throughout DeFi on Tuesday, 24th April, when the Renzo protocol’s liquid restaking token (LRT), ezETH, depegged and dropped to $688 on Uniswap.
The goal of Renzo’s ezETH is to keep the price of Ethereum [ETH] fixed and tracked. A depeg occurred, however, due to the community’s extremely negative response to the protocol’s controversial airdrop and tokenomics announcement.
Tuesday saw the LRT token trade on Uniswap at a steep discount of more than 75% compared to wrapped ETH, according to data from Dexscreener.
For “farmers” trying to get their hands on Renzo’s native coin, LRT ezETH, being the second-largest liquid restaking protocol is a huge issue.
Renzo soared to the position of second-largest restaking protocol with over $2.3 billion in TVL (Total Value Locked) thanks to its Season 1 ezPoints program.
In anticipation of the future native token “$REZ” and the possibility of receiving additional points, users boosted their positions on ezETH.
People were upset when Renzo said that they would only be distributing 5% of the REZ supply. Some also felt that Binance had gotten a better bargain than the community at large.
As pointed out by one of the unhappy customers, Binance whales can secure a 2.5% stake for free by locking BNB/stables for just 6 days! In addition, Binance put in $25 million. To pursue points for a 5% allocation, we froze $3B in ETH for months.
Users who are dissatisfied with Renzo’s decision to not yet permit withdrawals have chosen to sell their ezETH on secondary marketplaces that are extremely limited in liquidity.
The subsequent bankruptcies primarily impacted Gearbox and Morpho Blue, two of Renzo’s DeFi integrators. During the depeg, Gearbox lost over half of its ezETH TVL, and Morpho went bankrupt as well.
Also Read: The Open Network (TONNE) Issued $60 Million in Tether in Its Initial Days
