Renzo’s ezETH depegs 18.3% following REZ tokenomics announcement

from Renzo Ethereum ETH

-1.94%
-linked assets ezETH

-6.000080%
There has been significant disconnection in the past 24 hours, according to data from The Block.

ezETH fell 18.3% to around $2,642 within minutes, with some crypto data trackers showing ezETH falling to around $2,642. $700. The token has largely recovered since the depeg, but is still down 5.6% over the past 24 hours to settle at $3,077 at 12:40 PM ET.

Price development of ezETH on April 24. Image: The block prices

ezETH is a liquid restaking token (LRT) from the liquid restaking protocol Renzo. Users earn ezETH by redeeming ether or another liquid staking token on the platform. As such, ezETH is assumed to retain the same value as ether.

Ethereum was valued at $3,179 at 12:42 PM ET on April 24, according to The Block’s Ethereum Price Page.

What happened

Binance Labs, the crypto venture arm of crypto exchange giant Binance, yesterday announced the token distribution plan for REZ, Renzo’s governance token. Of the total token supply of 10 billion and the circulating supply of 1.05 billion, 10% of that REZ (105 million) would go to airdrops. Half of that 10% would go towards a Season 1 airdrop.

Like an X user passing by Tommy explains that Binance stakers using Launchpool would have had the opportunity to sell their tokens before ezETH holders. So a sell-off occurred as buyers looked to exit ezETH, with users likely looking to regain ETH to farm other liquid withdrawal tokens after learning the details of the REZ airdrop. Binance Launchpool allows users to stake tokens and earn rewards.

Additionally, Renzo depicted other token distribution allocations with disproportionately large pie chart slices, users on Adjusted for size, the pie chart actually showed more than 60% of the tokens going to the team, investors and advisors.

Renzo also allegedly dropped tokens to NFT holders of collections unrelated to the protocol, raising concerns about insider trading, Tommy added.