Celsius Network, one of the crypto lenders facing liquidity troubles in the industry's ongoing credit crisis, appears to have yet again used a maneuver on a decentralized finance (DeFi) protocol to free up hundreds of millions of dollars of trapped collateral.
Crucially, the transfer freed up $410 million in stETH, a type of staked ether token that Celsius had pledged as collateral against the loan on Aave. The stETH tokens are a derivative version of the Ethereum blockchain’s native token ether (ETH); each stETH token represents 1 ETH locked up on Ethereum's upcoming proof-of-stake network.
Last week, Celsius paid off its $228 million debt to Maker, another DeFi lending platform, and got back $440 million of collateral in the form of wrapped bitcoin (WBTC), a BTC derivative, blockchain data shows. After that, Celsius started to make good on its loans from Aave and Compound, paying down $95 million of the debt by Monday.
At press time, Celsius still owed $59 million to DeFi protocols, according to data on crypto data tracker Zapper: $8.5 million to Aave and $50 million to Compound, with $28 million and $199 million locked up on the platforms, respectively, as collateral, denominated in various tokens.
Should Celsius pay off the remaining debt, it could theoretically reclaim the combined $227 million of digital assets to boost its liquidity.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.