TRON founder Justin Sun has requested to withdraw 52,905 eth, worth $209 million, from Lido Finance. This could affect ethereum prices, based on historical data.
The withdrawal has been part of a broader ethereum (eth) accumulation strategy under which Sun reportedly purchased 392,474 eth at an average price of $3,027, now showing an estimated profit of $349 million.
This is not the first time that Sun has withdrawn large amounts of eth. On October 4, 2023, Sun withdrew 80,253 unstaked eth from Lido, around $131 million, and moved it to Binance in four days, around mid-October. Shortly after, a 5% drop in eth prices was observed. Analysts wonder whether Sun will employ something similar when retired assets are “handed over” to exchanges for possible sales.
The $209 million withdrawn from Lido Finance is noteworthy because it underlines the magnitude of Lido's importance to ethereum's proof-of-stake infrastructure. As a liquid staking protocol, Lido solves traditional staking problems, resource inaccessibility, and illiquidity by allowing users to stake eth and remain liquid with traded stealth tokens.
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Lido enables over 30% of all eth staked on the network, making it one of the backbones of ethereum's PoS mechanism. Large withdrawals, such as Justin Sun's, raise questions about the liquidity of the bets and the possible effects on the market. Although Lido's liquid staking solution makes tokens more accessible, the fear of sudden large-scale withdrawals reveals a critically vulnerable point in staking protocols. These measures may fuel fears of reduced liquidity. One such incident dates back to August 5 of this year, when withdrawals, possibly made by whales, caused the price of eth to drop from $3,317 to $2,419.
<img decoding="async" width="4000" height="2250" src="https://crypto.news/app/uploads/2024/12/ethereum-Exchange-Outflow-Total-All-Exchanges.png” alt=”Chart showing ethereum exchange outflows (total) across all exchanges during the year 2024, along with eth price trends. The chart highlights spikes in capital outflows, with significant peaks in August and December, and the price of ethereum rising to $3.9k in December.”/>
Although Lido withdrawals are not immediate, as they must go through the ethereum staking queue, such large movements can be indicative of changes in the market, especially if several important stakeholders do the same, causing an imbalance between the staked and non-staked assets.
In addition to the eth withdrawal, Sun deposited $964,000 EIGEN into HTX, a crypto exchange. Eigen (EIGEN) is the native working token of EigenLayer, a protocol that strengthens blockchain security by enabling the recovery of collateral against intersubjective failures. This deposit further indicates that your goal is to diversify liquidity between established tokens and other high-risk tokens you may own.
