@p236985qgbfjf
How do LST redemption delays complicate restaking risk?
LST redemption delays (e.g., the unbonding period for stETH) create a critical liquidity mismatch that severely complicates restaking risk. They trap capital during a crisis. In a normal market, actors can sell an asset to exit a position. During a panic, if everyone rushes to redeem their LST for ETH but faces a days-long queue, it creates a liquidity crunch. The market price of the LST can crash far below its NAV because sellers cannot access the underlying asset immediately. This deepens de-peg and makes managing leveraged positions impossible; a user facing liquidation cannot unbond their stETH in time to save their loan. This delay transforms a liquid asset into an illiquid one at the worst possible moment, amplifying volatility and losses.
0 reply
0 recast
0 reaction