Celsius Recovers $418M ‘stETH’ Stack from Aave Loan

The struggling crypto lending company has been unwinding its DeFi positions in the wake of a severe liquidity crisis. Unlocking $418M ‘stETH’ stack from Aave loan brings the total debt of Celsius across DeFi protocols down to just $59 million.

Key Takeaways

• Crypto lending platformCelsius repaid the majority of its debt to Aave today and managed to unlock 400,000 stETH from the protocol.
• Last week Celsius managed to completely recoverand shut down its MakerDAO vault, rescuing a 21,962 wBTC (worth about $456 million on Jul. 7).

The embattled crypto lending company Celsius has cleared almost all of its outstanding DeFi debt after recovering 400,000 collateralized Staked Ethereum (stETH) from Aave’s loan.

The withdrawal amounts to $415 million in crypto that’s been saved from the risk of liquidation—almost a tenth of the asset’s $4.4 billion market cap.

As revealed through Nansen Portfolio tracker, the firm repaid $81.6 million in Circle’s USDC stablecoin to Aave on Tuesday. This reduced its outstanding debt to the protocol from $90 million to just $8.5 million.

The recovered asset, stETH (“staked ETH”) is a crypto derivative token stored with Lido. Though not technically “pegged,” its value tends to closely track that of ETH, which was trading for about $1,044 as of this writing.

The reclaimed funds join 21,962 wBTC (worth about $456 million on Jul. 7) recovered from Celsius’s former MakerDAO loan, which was fully repaid last week.

Celsius quickly pivoted to paying down its Aave and Compound debt beginning on Monday, contributing a combined $95 million in stablecoins to loans across both protocols, according to Etherscan data.

The latest move brings the embattled lending platform’s total debt across DeFi protocols down to just $59 million at the time of this writing. Crypto data tracker Zapper shows that Celsius, in addition to the $8.5 million still owed on Aave, has some $50.3 million in DAI stablecoins on Compound. By paying off this debt, Celsius could recover another $227 million, further strengthening its liquidity.

It’s now been one month since Celsius became one of the first industry platforms to freeze user withdrawals—joined shortly thereafter by numerous firms, including CoinFLEX and Babel Finance—in response to bear market liquidity troubles.

Though recent developments may appear positive for Celsius and its customers, some details about its financial position remain hazy. For example, the firm hasn’t clarified where it’s sourcing its crypto to pay down its debts, leaving only its on-chain footprint to guide onlookers.

A report in late June revealed that FTX CEO Sam Bankman-Fried dropped assistance to Celsius after determining that its balance sheet could not save.

Related Reading:

What Happens If Crypto Exchanges Such as Celsius or Coinbase Goes Bankrupt?