Ethereum’s native token Ether rose above $3,000 on March 22, as new data suggests that Three Arrows Capital invested at least $110million worth of Ethereum into Lido’s liquidity pools.
According to data from Etherscan, the Singapore-based hedge fund manager provided liquidity in the amount of 36,401 Ethereum to Lido’s Curve stETH pool using an Ether wallet. It was therefore eligible to receive at minimum 36,401 stacked Ether tokens (stETH) from Lido. This is to ensure low slippage in un-staking these tokens for real Ethereum and staking reward.
Three Arrow Capital provided an ETH wallet for third-party Ethereum users. Source: Etherscan.io
A second Ether address marked with the word “fund” was sent almost an hour later to Curve stETH pool. It contained 6,993 Ethereum (worth $21.12million), hinting at the fact that Three Arrows Capital was increasing liquidity for the Lido. The fund could have staked Ether worth more than $130million on March 22 if this is correct.
Participating in ETH 2.0
The Three Arrows Capital’s huge Ether inflow into Lido Staking Pools was done before the launch of Ethereum’s new validation system in summer 2022.
Ethereum will change its network protocol to energy-intensive proof of work to proof-ofstake. This allows users to validate transactions and add blocks onto the Ethereum blockchain. Users can stake 32 ETH (or its multiples) for at least one calendar year to get annual yields.
Total number of validators for Ethereum as of March 21, 2022 Source: Glassnode
Only 8% of the ETH supply has been staked in ETH 2.0 contracts since December 2020’s introduction. This shows that Ether users are not willing to lock 32 ETH for a year — roughly $100,000 at March 22’s price — and it is a sign that Ether users aren’t ready to risk losing their ETH supply. This has opened up opportunities for liquidity miners like Lido.
Lido, which allows users to lock any amount Ether so they can participate in the ETH 2.0 chain running without lock-ups, is notable. It now holds more than 80% in Ethereum liquid mining space and nearly $8.25 Billion worth of ETH at March 22’s prices.
Lido against other Ethereum liquidity mining pool. Source: Defi Llama
Three Arrows Capital appears to be aiming to become an Ethereum network validator via a less risky alternative such as a liquidity staking pools. The fund seems to have been also accumulating more Ether.
ccumulation after staking
Three Arrows Capital received approximately $22.50 Million worth of Ethereum tokens from wallets linked with crypto exchanges FTX or Deribit on March 22nd, less than an hour after it staked 36.401 ETH into Lido’s pool.
The Three Arrows Capital address (0x4862733B5FdDFd35f35ea8CCf08F5045e57388B3) has inflowed 7,500 ETH in the past seven hours, with a total value of about $22.43m; of which 5,500 ETH was withdrawn from FTX and 2,000 ETH was withdrawn from Deribit. https://t.co/27A1u6o4su
— Wu Blockchain (@WuBlockchain), March 22, 2022
Related: Ether bulls eyes resistance at $3K as network prepares for ‘The Merge’
It was unclear if Three Arrows bought the coins new or withdrew them to hold or for further staking. However, many ETH traders consider the constant loss of Ether resources across crypto exchanges to be a bullish sign.
PostyXBT, an independent analyst in the market, pointed out that $3,000 is a critical inflection point for ETH prices. It noted that only flipping above this level could lead to Ether moving toward $3,500.
Chart of the USD/ETH 12-hour price. Source: TradingView, PostXBT
He wrote, “I believe we see a further +10% move towards key resistance.”
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