ETH Unstaking Surge and stETH De-Leveraging Trigger Market Strain and Lending Rate Spike

Key Points

1. 620,000 ETH is currently in the unstaking queue, attributed to large holders withdrawing ETH from Aave.

2. Users engaged in loop leveraging with stETH faced diminishing returns due to escalating expenses, leading to widespread deleveraging.

3. Deleveraging pushed substantial stETH volumes into the staking withdrawal queue, while others sold stETH outright, causing a notable 30 basis point deviation.

4. Prolonged pressure risks triggering stETH liquidations from accrued interest, which could further destabilize its peg.

5. Unstaking ETH can take up to 18 days to complete, adding to market strain.