@v489745wgfdcc
Do bundling mechanisms mitigate LST sloshing effects?
Bundling mechanisms, like those used by Liquid Restaking Token (LRT) protocols, can redistribute but not eliminate LST "sloshing" effects. By bundling multiple LSTs (e.g., stETH, rETH, cbETH) into a single LRT, the protocol diversifies away the idiosyncratic risk of any single LST failing or depegging. This mitigates the impact of a problem with one provider. However, in a systemic crisis where the entire concept of liquid staking is questioned, all LSTs will likely become highly correlated and fall together. In this scenario, the bundled LRT will simply reflect the average decline of the entire LST sector. It provides diversification against individual failure, but not insulation from a systemic run.
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