ezETH decoupled violently to 0.2WETH! Triggering large-scale liquidation, bargain-hunting buyers make huge profits

The liquidity token ezETH of the liquidity re-pledge protocol Renzo experienced a brief decoupling this morning, and the price once plummeted to 0.2WETH. This incident occurred amid a large amount of liquidation activity, especially on the Morpho lending protocol, resulting in nearly a thousand ezETH being liquidated. At the same time, the decoupling provided the market with a bargain-hunting opportunity, with most buyers winning.

Renzo, the Ethereum liquidity re-pledge protocol, became famous for launching Binance’s 53rd new coin mining project last night (23rd). However, its liquidity token ezETH briefly decoupled this morning, causing social The group was once panicked, worried that such liquidity pledge or re-pledge agreements would lead to serial liquidation risks due to decoupling.

ezETH was once decoupled to 0.2WETH

According to Dexscreener data, ezETH and WETH in the Uniswap capital pool were originally stable at a 1:1 exchange relationship. However, at around 10:35 this morning, they were once decoupled to a minimum of 0.2132 WETH, equivalent to $688. Fortunately, it quickly stabilized to 0.97WETH around 11 o'clock and maintained this level until the deadline.

Exploring the reasons for the temporary decoupling of ezETH may be related to a series of liquidation events of the lending protocol Morpho. According to the platform’s data, at 10:34 this morning, the user (0xaA…FB13) was the first to be liquidated on Morpho for 256.93 ezETH, worth approximately US$837,000. Then between 10:37 and 10:40, users (0xB0…1d12) suffered a series of liquidations, accumulating 702.27 ezETH, worth approximately US$2.29 million.

Gearbox will release ezETH decoupling report

Regarding the decoupling incident of ezETH, this may be a "chicken and egg, chicken and egg" problem. On the one hand, the serial liquidation transactions undoubtedly exacerbated the decoupling of ezETH; on the other hand, basic factors, such as Uniswap’s lack of liquidity and ETH price fluctuations, may also be the root cause of this incident.

Gearbox, a protocol that provides ezETH with up to 9x leverage, responded: Due to the decoupling of ezETH quoted by the RedStone oracle, some credit accounts were liquidated, and the Gearbox platform did not generate bad debts. Reckoning is never pleasant, however, and we'll get a full recap of what happened shortly.

Renzo’s official Twitter account has not yet publicly commented on this incident.

Buyers who buy the bargains make a profit

The price decoupling of ezETH not only caused panic among investors, but also attracted buyers looking for bargain hunting opportunities. According to the data on the monitoring chain of X account Aiyi, a giant whale spent 2,400 ETH to purchase 2,499 ezETH (approximately US$6.98 million), thus making a net profit of 99 ETH.

In addition, Lookonchain monitoring data on the chain pointed out that czsamsunsb.eth invested 4,099 ETH to purchase 4,221 ezETH and achieved a net profit of 121.65 ETH in about 2 hours, worth approximately US$395,400.