Bankrupt Crypto Lender Awaits Return of Staked Ether: A Dilemma Worth $784.7 Million

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Embattled cryptocurrency lending titan Celsius is on tenterhooks as it anticipates the recovery of its substantial Ether deposit from the leading liquid staking provider, Lido. The retrieval, however, might be subject to an agonizing delay.

Celsius Makes A Big Play

Currently navigating bankruptcy proceedings, Celsius is keen to reclaim its substantial Ether (ETH) cache, having made considerable investments in staked Ether, denoted as stETH, via the liquid staking platform Lido. The recent development from Lido that allows for withdrawals has spurred the cryptocurrency lender into action.

The lending firm has already set the wheels in motion, initiating the withdrawal of its staked ETH from the Lido protocol. Per transaction records, Celsius has demanded the return of a whopping 428,084 stETH return, divided into manageable batches of 1,000 each.

The value of this immense Ether hoard, calculated based on the prevailing market prices, is estimated to be around $784.7 million. This significant financial move from Celsius is in line with a similar transaction of stETH executed on May 15th, indicating preparatory steps towards withdrawal.

Can Lido Handle Such A Staked Ether Withdrawal Request?

Upon the successful culmination of the withdrawal procedure, Celsius is set to gain an equivalent value in Ether. At the same time, the stETH tokens will be effectively eliminated, or “burnt,” by the Lido protocol.

Data aggregated by Dune Analytics reveals that the total amount of stETH waiting in line for withdrawal is 442,000, split across 141 requests. The approximate valuation of these pending withdrawals is $808 million, with Celsius accounting for the lion’s share. According to Dune’s records, the total amount processed thus far is 629 ETH.

On May 16th, Lido affirmed its readiness to process the withdrawal requests, claiming it held sufficient ETH buffers.

However, the burgeoning withdrawal requests for Ether from Lido could strain the network’s withdrawal queue, a dynamic procedure subject to constant change. 

Given that Lido is the most prominent staking provider, boasting nearly 30% of the market share, Celsius might face a substantial waiting period before it can lay hands on its Ether, especially if the volume of requests continues to rise.

Positive News For Affected Users?

The returned staked Ether could be harnessed as part of Celsius’s restructuring efforts or as a means to repay a fraction of its staggering $4.7 billion debt to creditors.

In a notable move in late February, Celsius converted 22,962 wrapped Bitcoin (WBTC) into Bitcoin, a transaction whose worth hovered around the $540 million mark.

In the face of uncertainty, the crypto lender remains hopeful, bracing to recover its significant Ether stash. The return of these assets could play a crucial role in the company’s attempts to navigate the complex waters of bankruptcy and financial restructuring.

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