Original author:0x.Gene
Original author:
The background of the matter is that Twitter user @yieldchad claimed that Celsius’s ETH position has been “insolvency”. The core logic is that only about 27% of Celsius’s 1 million ETH is readily available ETH, and the other 73%: more than 44% The form of stETH exists, and 29% are directly pledged to 2.0. "If all 1 million ETH customers want to cash out in the short term", 730,000 ETH can only be cashed in at 280,000.
Regarding the negativity of this matter, you can refer to this article by teacher @0x_Todd. I agree with its core logic: if there is an extremely serious run, it is very dangerous.
The original tweet by @0x_Todd is as follows:
Celsius is a huge CeFi financial management platform, which is very famous in the United States. Among them, there are about 1 million + Ethereum of customers stored in it for financial management. Cel used 40,000+ to dig a certain eth2.0 before, but the custody platform stakehound was stolen a year ago, so this part of the funds became empty. Cel has always been "secret", and it was only recently exposed. However, the position of 100w ether is now affected...
Logically speaking, as a customer, what is your best option now? It's very simple, withdraw cash as early as possible, faster than running 😂. If you withdraw the cash early, you can raise it; if he withdraws the cash late, he may not be able to leave. Everyone understands this truth. But the problem is that the ETH spot in Cel's hand is not enough to run. It still has 26w $ETH in stock, and the remaining 45w is $stETH. If 20,000 to 30,000 $ETH fled every week, it would not last for a few weeks. You may say that stETH can be exchanged for ETH on Curve.
But, sorry, retail investors can. Its size is impossible, and its fluidity is not enough, so the pool must be smashed. If there is no run, nothing will happen, and once it is run, it will easily explode. Not me Fud, but anything is possible in this raging environment. However, this 2.0 bad debt is now exposed. If Curve LP is scared off in a few days, it will be even worse.
Moreover, those supervisions are not vegetarian, and if there is another investigation, it is inevitable that people will panic. This matter is not impossible to solve 😂. There is a relatively high probability that Celsius will pay back the money out of its own pocket even if it is a waste of money, and then appease the customer's emotions after the repayment is over. It is only a small probability that they will embark on the desperate road of running. So, don't be too FUD for now, just wait and see.
But at the same time, I would like to add some other information for your judgment:
1. How much did Celsius lose in the Stakehound incident?
The total amount of stakehound ETH is 65,270, and the loss in the fireblocks event on May 2, 2021 was 38,178 (58.5%). The original citation stated that Celsius held 42,306 (st) ETH. Even if calculated according to this amount, is the actual loss 24,750? Accounting for 2.5% of the total ETH assets under custody
2. How much is the ETH-related position held by Celsius?
If it is calculated according to the time after 12-18 months, then its 1 million ETH is still 1 million ETH; if it is calculated according to the present, immediately, immediately, is it about 550,000 ETH that the original author said? (No) Yes, the stETH-ETH Pool only has about 300,000 ETH liquidity. If a trader who is unscrupulous wants to sell his 440,000 stETH at an average price of 0.6E at one time, then the original author’s The algorithm is right. The question is, is there such a lack of heart? Buying stETH at a discount is the most crowded transaction, and a 5% discount may attract a bunch of buyers... The liquidity of the market is dynamic, not static.
3. The key factor in the whole incident is the ratio of current/short-term/long-term among Celsius clients.
It is meaningless to avoid this point to discuss liquidity. Otherwise, turn right when you go out and ask the bank, which bank has 27% cash reserves? In the final analysis, it is a bank run problem. How to calculate the asset value of a bank? If you want it to cash out all deposits within one month, can all its assets be recovered at a 50% discount?4. Judging from the historical tweets, the original work is also a special bearish account, and it has been calling for bearish targets all the year round:
coinbase tesla tether celsius nexo; also has been questioning Celsius’s excessively high interest, thinking that the income on the chain cannot cover the interest to customers, but he ignores a very important business model of Celsius: customers can choose to settle interest with Cel platform currency (yes Didn’t it remind you of the dydx by the Daming Lake, looks?) So if Celsius has no run risk, its balance sheet may be healthy (I mean possible, after all, there is no audit data).5. Conclusion: Did Celsius engage in various controversial and potentially risky behaviors?
Yes; is there "insolvency/bankruptcy"? No, it may be facing a sentiment-driven run, rather than strictly "insolvency". Based on its overall asset size and available lending tools, it has the ability to ensure liquidity. Taking a step back, it is really gg, and it is unlikely to sell assets at a substantial discount, because selling coins at a fracture price is creating an irreparable hole for itself.
I have never been a fan of nexo or celsius, but this deliberate fud rendering is still a bit disgusting. For those of us who eat melons, fud emotions need to be paid attention to, because sometimes the truth is not important, what matters is what the market believes, and when the avalanche brought by fud really occurs, each of us is in it .The discount of stETH, the possibility of fud masses is much higher than the possibility of Celsius selling coins.
