Chaos Labs has been actively monitoring market conditions over the past 24 hours, conducting real-time risk assessments to ensure the Renzo protocol remains secure. These market events serve as valuable stress tests for our systems, and analyzing user behavior during these periods helps refine our risk models.
We’re sharing this preliminary analysis to provide the community with insights into how the Renzo protocol performed during the recent market downturn. With the Renzo protocol’s withdrawal mechanisms functioning properly and sufficient liquidity available in the buffer, secondary market ezETH prices have remained closely aligned with their peg value.
Summary
A summary of our major findings over the past 24 hours are:
- The ezETH peg maintained stability despite the ETH price crash. We’re encouraged by how effectively the current liquidity strategy preserved ezETH price stability.
- With ezETH primarily being used as collateral against wstETH on Aave, the existing liquidity buffer has proven sufficient to handle withdrawals during ETH price downturns. While other factors may also drive withdrawal demand, users can take comfort in knowing that these market conditions typically result in minimal forced selling or withdrawal pressure.
- No significant increase in withdrawal activity has been observed during the recent market volatility.
- The absence of liquidations on Aave indicates minimal forced selling of ezETH. This should reassure holders that they can exit their positions efficiently without encountering disruptive liquidity events.
Risk Analysis
Renzo has functioned normally across all metrics tracked. The sections that follow dive a little deeper into the major buckets of protocol risk.
Peg
The ezETH peg has remained stable throughout the recent volatility, remaining within its usual trading range. With the Renzo protocol’s withdrawal mechanisms functioning properly and sufficient liquidity available in the buffer, secondary market ezETH prices have remained closely aligned with their peg value.
The largest observed deviation was approximately -29 basis points, while the average deviation hovered around -12 basis points. This performance suggests consistent market confidence and adequate liquidity, with limited dislocation between primary and secondary market valuations.
Withdrawals
Despite the heightened market volatility, the Renzo protocol has shown no significant increase in withdrawal requests. Renzo’s withdrawal buffer remains robust, currently holding 22.8k stETH and 4.5k ETH, totaling 27.4k ETH-equivalent assets.
The Renzo withdrawal buffer has increased during the recent volatility, providing an additional safety margin if needed.
DEX Liquidity
ezETH continues to maintain strong DEX liquidity, with approximately 1 300 ETH available across major pools.
| Chain | Pool | Exit Liquidity in ETH |
|---|---|---|
| Ethereum | Uniswap V3 ezETH / ETH | 70 ETH |
| Ethereum | Balance V2 | |
| ezETH-wETH | 883 ETH | |
| Ethereum | Fluid ezETH/ | 335 ETH |
| Ethereum | Total (Major Pools) | 1 288 ETH |
Dependencies
Liquidations
No liquidations of ezETH positions were observed on Aave during the recent volatility, confirming that lending protocol integrations introduce no forced selling of ezETH occurring.
Lido
Due to its greater use as a collateral asset to stablecoin borrows and smaller relative withdrawal buffer, stETH is more directly exposed to movements in the price of ETH than ezETH. This indirectly impacts Renzo due to its onboarding as a collateral token backing ezETH. Any risk events affecting stETH, therefore, affect Renzo.
Currently approximately 106k stETH collateralized ezETH, making up approximately 34% of the total backing.
stETH briefly depegged approximately 40bps before quickly returning to 20bps below par. While there is no evidence of any solvency issues affecting the underlying value of stETH, there could be short term noise around its price in secondary markets, which may result in an increase in its share of Renzo collateral.
