Share this article
Goldman Sachs Says DeFi’s Interconnections Can Increase Systemic Risk
Contagion risk related to UST’s depegging hit staked ether (stETH) because of Lido’s exposure to the Terra ecosystem, the bank said.
By Will Canny
Updated May 11, 2023, 3:22 p.m. Published May 23, 2022, 12:56 p.m.
Make us preferred on Google
One little-noticed effect of the terraUSD (UST) collapse relates to Lido, a liquid staking protocol, Goldman Sachs (GS) said in a report Friday, and shows how the connections between decentralized finance (DeFi) applications amplify systemic risk.
Lido is a DeFi app that allows ether (ETH) holders to set tokens aside to validate transactions while also earning yield. Investors receive a staked ether token (stETH) at a ratio of 1:1, and can use it as lending collateral or across supported trading pools, the bank said.
STORY CONTINUES BELOW
Don't miss another story.Subscribe to the Crypto Daybook Americas Newsletter today. See all newsletters
The collapse in UST hit stETH, with the token trading at a 4.5% discount to ETH, Goldman said. That’s because stETH holders were able to convert their tokens into bonded ether (bETH) and earn rewards on Terra’s Anchor Protocol. As a result, stETH was vulnerable to Terra blockchain halts, which impact withdrawals, according to the report.
This event is important because Lido has one-third of all staked ether deposited in it and shows how “DeFi’s compostability can theoretically increase systemic risk,” the bank said.
DeFi is an umbrella term used for lending, trading and other financial activities carried out on a blockchain, without traditional intermediaries.
Read more: BofA Says Crypto Winter, Contagion Risk Concerns Are Overdone
More For You
KuCoin captured a record share of centralised exchange volume in 2025, with more than $1.25tn traded as its volumes grew faster than the wider crypto market.
What to know:
- KuCoin recorded over $1.25 trillion in total trading volume in 2025, equivalent to an average of roughly $114 billion per month, marking its strongest year on record.
- This performance translated into an all-time high share of centralised exchange volume, as KuCoin’s activity expanded faster than aggregate CEX volumes, which slowed during periods of lower market volatility.
- Spot and derivatives volumes were evenly split, each exceeding $500 billion for the year, signalling broad-based usage rather than reliance on a single product line.
- Altcoins accounted for the majority of trading activity, reinforcing KuCoin’s role as a primary liquidity venue beyond BTC and ETH at a time when majors saw more muted turnover.
- Even as overall crypto volumes softened mid-year, KuCoin maintained elevated baseline activity, indicating structurally higher user engagement rather than short-lived volume spikes.
More For You
XRP drops 4% as traders watch whether $1.88 support holds
Price stabilizes near recent lows after a volatile pullback from above $2.
What to know:
- XRP slipped nearly 4% as bitcoin fell below $88,000, with price action driven more by market structure and positioning than by changes to Ripple’s fundamentals.
- Spot XRP ETFs saw about $40.6 million in weekly outflows, suggesting institutional profit-taking and rotation rather than a loss of confidence in the asset.
- XRP remains range-bound in a tight consolidation between support around $1.88 and resistance near $1.93–$1.95, with fading volume pointing to a larger move once the current stalemate resolves.
Top Stories
