Deniz 
EzETH, an LRT token on the Renzo Protocol, dropped hard over night. The other people from the decentralized finance (DeFi) industry are upset by the wrong and unpopular tokenomics announcement, which reduced this.
Related to crypto “airdrop hunters,” LRTs are gaining more popularity. Most of these investors have overleveraged exposure to the platforms’ ETH-pegged assets to increase their chances of obtaining a portion of the project’s token upon launch.
However, a lot of criticism arose when Renzo revealed that the first airdrop had only set aside 5% of the entire REZ token supply.
There was also discussion on the 2.5% token distribution to REZ’s Binance launch pool ‘farmers’ two days earlier than the distribution to ezETH holders. Sadly, ezETH holders benefitted from this since it offered them the opportunity to offload their shares prior to the airdrop receiving parties.
This caused many ezETH holders to begin reducing their holdings. The depreciation was to happen as the traders tried to leave their ezETH positions, which currently do not allow withdrawal to the underlying assets directly. Hence, they had to draw from Blast’s $200 million liquidity pool, which was a layer-two Ethereum network.
A ‘liquidation cascade’ ensued as a result, with DeFi lending platforms automatically resolving leveraged holdings featuring ezETH as collateral. More positions were liquidated as a result of this positive feedback loop, which further decreased the price of ezETH through the sale of collateral.
The price of ezETH briefly dipped to $700. A somewhat lower drop was reported by the credit agencies’ price oracle, which averages prices across several markets. Liquidation was limited to traders having a leverage of 5x or more.
DeFi Security Alert: Recent Losses and Liquidations
Losses were reported on protocol losses of $34,000 and $83,000, while liquidations were around $65 million each for Morpho and Gearbox (approximatelyPeckshield, a DeFi security company, reported that a fortunate individual recovered almost all his insured funds, while another individual unfortunately lost around $90,000 upon liquidating his $900,000 stake.
The other victim lost approximately $300,000 to a phishing fraud that was pretending to be the official Renzo X account.
P.S This is not investment advice.