[Chaos Labs] - Monthly Risk Review May

Introduction

Each month, Chaos Labs delivers a comprehensive, data-driven analysis of Renzo’s key metrics, ensuring full transparency for the community. By closely monitoring utilization trends, liquidity dynamics, and borrower behaviors, Chaos Labs aims to proactively identify and mitigate emerging risks to maintain protocol stability.

Performance

During May, ezETH appreciated relative to ETH, with the ezETH-ETH rate increasing from approximately 1.0471 on May 1st to 1.0505 by May 31st. This corresponds to a realized APR of approximately 15.6%, indicating a strong and stable yield performance over the period.

Peg deviation throughout May remained low and stable. The largest absolute deviation was 0.1398%, while the smallest was 0.0170%. These narrow deviations demonstrate effective peg maintenance across the month, reflecting strong market confidence in ezETH.

Price Deviation In May (bps)

At the end of May, the total TVL in Renzo stood at approximately 361,124 ETH. Netflows for ezETH were largely positive over the course of the month, indicating steady user interest and deposits into the protocol.

Liquidity

As of the end of May, the Renzo withdrawal buffer was composed primarily of stETH and ETH, with approximately 21,973 stETH and 7,313 ETH held on May 31st. This dual-token structure helps ensure redemption flexibility and exit stability during periods of elevated user activity. Compared to the previous months, the composition and size of the withdrawal buffer remained stable, indicating consistent liquidity provisioning and no signs of stress or unusual withdrawal behavior.

Cross-chain liquidity experienced notable outflows during May. The most significant reductions occurred on Blast, Ethereum, and Optimism, with Blast seeing the steepest drop at nearly 80 percent. These trends seem to be primarily driven by increasing flows into Unichain, where the ETH/ezETH pool now holds approximately 22.8M USD in liquidity.

The composition of exit liquidity by token declined across the board over the month of May on all chains except Unichain. wETH remained the dominant asset, while wstETH saw modest reductions. USDC maintained a consistently low share throughout the month. This overall contraction in exit liquidity was partially offset by a significant increase in ETH exit liquidity on Unichain, which reached 4,900 ETH by the end of May.

Composability

ezETH integration across DeFi protocols on Ethereum remained relatively stable in May. Aave continued to be the primary destination for ezETH, maintaining its dominant position. Activity on other protocols stayed flat as well.

Borrowing activity against ezETH on Aave increased from $300M to $400M in May. This rise suggests growing market confidence in ezETH as a collateral asset and reflects broader adoption in lending markets.

Top suppliers of ezETH on Aave remained consistent, with the largest addresses continuing to dominate supply share. Minor reshuffling occurred in mid-tier suppliers, but no significant concentration risk changes were observed.

Summary

In May, Renzo demonstrated strong protocol stability across all major metrics. ezETH maintained its peg with low deviation, delivered a competitive 15.6 percent APR, and saw positive netflows. While cross-chain liquidity declined, this was offset by substantial growth on Unichain. Borrowing activity continued to strengthen, particularly on Aave. Overall, the protocol remains healthy and well-capitalized, with no material risk signals observed.