Justin Sun Withdraws $209M in ETH from Lido Finance, Reaps $349M in Profits

Justin Sun’s recent move to withdraw $209 million in Ethereum (ETH) from Lido Finance has sparked considerable attention and speculation about its potential impact on the Ethereum market. This withdrawal is part of a broader strategy where Sun accumulated 392,474 ETH at an average price of $3,027, now showing a profit of approximately $349 million.

This is not the first large-scale withdrawal by Sun. In October 2023, he withdrew 80,253 ETH, valued at about $131 million, which he moved to Binance. Following that move, ETH experienced a notable 5% price drop. Analysts are now questioning whether Sun will once again trigger price fluctuations when these withdrawn assets are eventually delivered to exchanges for possible sell-offs.

The $209 million withdrawal emphasizes the crucial role that Lido Finance plays in Ethereum’s Proof-of-Stake (PoS) system. Lido, as a liquid-staking protocol, allows users to stake ETH while maintaining liquidity through its stealth tokens, and it accounts for over 30% of all staked ETH. While Lido’s mechanism has made staking more accessible, significant withdrawals, particularly from influential figures like Sun, can raise concerns about the liquidity and stability of the Ethereum network.

Historically, large withdrawals have caused price dips. For instance, a major drop in ETH’s price from $3,317 to $2,419 was observed in August 2023, following similar large withdrawals. While Lido withdrawals are not immediate, and must go through the Ethereum staking queue, the cumulative effect of multiple large withdrawals can destabilize market conditions by creating an imbalance between staked and unstaked assets.

In addition to the ETH withdrawal, Justin Sun made a $964K deposit of EIGEN tokens to HTX, a cryptocurrency exchange. Eigen (EIGEN) is the native token of EigenLayer, a protocol designed to enhance blockchain security by enabling the restaking of collateral. This move suggests that Sun is further diversifying his liquidity by investing in established tokens as well as high-risk assets.

As these developments unfold, it will be important to monitor both the impact on Ethereum’s market and Sun’s overall strategy, which appears to be focused on diversifying his holdings and managing liquidity across different platforms.