ezETH Decoupling Phenomenon: Whales Buy the Dip for Profit, Project Team Urgently Adjusts Airdrop Rules

Author: Mia, ChainCatcher

Editor: Marco, ChainCatcher

With Binance officially launching the 53rd new coin mining project, the liquidity re-staking protocol Renzo (REZ) quickly became the focus of the crypto community. The anticipated listing on Binance was expected to bring significant benefits to Renzo; however, the actual situation was unexpected. The TVL, which was supposed to surge, did not see a dramatic increase and was instead overshadowed by news of the de-pegging of Renzo's derivative token ezETH. Within 24 hours of the listing announcement, ezETH briefly de-pegged, with prices dropping as low as $2262, leading to unfortunate liquidations for some users.

This sudden de-pegging event unexpectedly allowed some users to taste the sweetness of bottom-fishing. A whale keenly seized the opportunity, purchasing 2499 ezETH worth $6.98 million with 2400 ETH, netting a profit of 99 ETH. Meanwhile, an account associated with wallet address 0xaa1 (related to czsamsunsb.eth) also earned 193 ETH, approximately $600,000.

This incident quickly sparked widespread attention and questions among crypto community users: "Clearly a positive event, how did it suddenly turn negative?" So, what exactly happened to Renzo after the listing news was released?

Coincidental Timing

According to relevant data, the de-pegging of ezETH was detected at 11:17 on April 24, just 17 hours after Binance announced the new coin mining project for the liquidity re-staking protocol Renzo (REZ). Notably, what happened in those 17 hours that could have caused ezETH to de-peg? The answer lies in Renzo releasing the REZ token economic model and sharing airdrop details, which sparked significant dissatisfaction within the crypto community.

Token Economics Triggering Community Discontent

In the announced token economics, only 5% and 2.5% were allocated to the first season of the ezPoints airdrop and launchpool shares, respectively. Additionally, according to the airdrop rules, the top 5% of addresses will immediately unlock 50% of their tokens at TGE, with the remaining portion gradually released over the next six months. This design means that at TGE, most of the liquidity is still effectively controlled by the project team.

This fact raised concerns among some investors, who expressed skepticism about the project's claim of "decentralization," believing there was a clear contradiction with actual operations. They even stated that while the project team touted decentralization, they only airdropped 5% of the token supply, which seemed absurd; a staggering 70% of the token supply remained in the hands of insiders, and the so-called decentralization had not been realized at all.

This discontent quickly spread throughout the community, and discussions about "Renzo (REZ) token economics" continued to ferment, becoming the main catalyst for the de-pegging of ezETH.
Some users believed that Binance stakers using Launchpool would have the opportunity to sell their tokens before the ezETH holders' airdrop unlock, leading to sell-offs among some ezETH stakers, who hoped to use the proceeds from selling ezETH to invest in other liquidity re-staking project tokens.

Some users pointed out on X that Renzo used a pie chart with uneven proportions to describe the token distribution, causing confusion about how many REZ tokens were allocated where. After adjusting the sizes, the pie chart actually showed that over 60% of the tokens flowed to the team, investors, and advisors.

Moreover, the airdrop rules indicated that 2% (0.1% of the total token supply) of the 5% airdrop for the first season had been allocated to NFT communities such as Milady Maker and SchizoPosters, which appeared to have no connection to the Renzo protocol itself, raising user concerns about insider trading.

"Looping" Death Cycle

In fact, there existed a "looping" leverage strategy in the previous Renzo airdrop reward activities, where airdrop farmers could sell ezETH for ETH and then re-deposit ETH into the protocol to accumulate more rewards, leading users to exit by selling large amounts of ezETH.

Thin on-chain liquidity could not withstand the selling pressure, exacerbating the large-scale sell-off of ezETH, resulting in a significant drop in token value. This also led to massive liquidations in many lending markets, with reports indicating that individuals holding leveraged positions in ezETH lost over $50 million.

Renzo Adjusts Airdrop Rules in Response to Community

The de-pegging phenomenon of the ezETH token caught the attention of the Renzo project team. In response to community skepticism, the project team quickly clarified that airdrop eligibility depends on ezPoints at the time of the snapshot, unrelated to the ezETH balance at the time of the snapshot (regardless of whether it was sold). Users whose Pendle YT expired before the snapshot would be eligible for the airdrop as long as their scores met the minimum standard. NFT airdrops would be calculated based on the number of NFTs, not the number of wallets. However, this response did not alleviate community users' concerns, and ezETH remained in a "de-pegged" state.

Upon realizing that the root of the problem lay in the token economics and airdrop details, the Renzo project team made a series of adjustments to stabilize community sentiment and rescue the token price.

To address user dissatisfaction with the details of the token economics, the project team increased the allocation ratio for the first season airdrop from 5% to 7% of the tokens. Renzo raised the airdrop amount to 12% of the total supply of 10 billion tokens, with 7% allocated in the first phase (launching at the end of the month) and 5% in subsequent phases. Additionally, the date for claiming the first airdrop has been updated to April 30.

According to the new airdrop standards, participants with 360 or more Renzo points are eligible for the airdrop, and they can claim the airdrop proportionally based on their points during the token generation event. Previously, the top 5% of eligible wallets would receive half of the airdrop over the next six months. In the new update, 99% of eligible airdrop addresses can fully unlock after TGE, and wallets with over 500,000 ezPoints will unlock 50% at TGE, with the remaining portion vesting linearly over three months.

Furthermore, the project team has also eliminated the previous "looping" leverage strategy to maintain the liquidity of ezETH.

According to CoinGecko market data, ezETH is currently quoted in the range of $3056 to $3121 across various platforms. Although it remains in a "de-pegged" state, the price is steadily recovering, and the discount to ETH is narrowing.