The lingering turmoil in the DeFi industry begins to subside after DeFi lending giant Celsius recently paid off more than $81 million in debt to Aave and has recovered $410 million of its staked ether (stETH). Celsius, which became the epicenter of the demise of the DeFi line of lending platforms, is finally getting closer to fully resolving its liquidity problems.
According to ether scan Data sent Celsius $81.6 million in USDC to decentralized lending protocol, Aave, and further paid off a significant amount of its $90 million debt. Following this, Celsius reclaimed $410 million in stETH. However, at the time of writing, the lending platform is still owed the combined amount of nearly $59 million for both Aave and Compound Finance.
What happened to Celsius?
Last month, Celsius’ announced that they are ceasing withdrawals, swaps and transfers between accounts due to liquidity issues. This, in turn, caused a knock-on effect in the crypto lending space with panic withdrawals across platforms, forcing companies to temporarily suspend withdrawals and freeze user funds.
Celsius noted in its public announcement that “due to extreme market conditions” they were “pausing all withdrawals, swaps and transfers between accounts”, in order to “place Celsius in a better position to meet its withdrawal obligations over time”. Following the announcement, the native token of Celsius network, CEL witnessed a massive sell-off, falling more than 54% overnight and currently stands at $0.73.
Following the liquidity issues, the platform had to pledge a large portion of its stETH after which the ETH to stETH ratio charts showed discrepancies. It is important to remember that Celsius is a huge holder of stETH, as well as the largest holder of interest-bearing stETH (stETH on Aave). Because of this, it was blamed for the stETH token losing its 1-to-1 linkage to ether.
LIDO, the “liquid staking” service provider defined the sETH to ETH ratio – “stETH” [SETH] is backed by ETH (on the beacon chain), and the market is now starting to realize the fair price for stETH [SETH]†