Justin Sun Cashes Out $209M ETH From Lido Finance

The founder of TRON, Justin Sun, has applied to withdraw 52,905 ETH, worth $209 million, from Lido Finance. This could affect Ethereums prices, says historical data.

The withdrawal has been part of a larger Ethereum (ETH) accumulation strategy under which Sun allegedly purchased 392,474 ETH at an average price of $3,027, now showing an estimated profit of $349 million.

This is not the first time that Sun has withdrawn large chunks of ETH. On Oct 4, 2023, Sun withdrew unstaked 80,253 ETH, coming around $131 million from Lido, and moved it to Binance within four days, around mid-October. Soon after, a 5% drop was observed in ETH prices. Analysts wonder if Sun will employ something similar when withdrawn assets are ‘delivered’ to exchanges for possible sell-offs.

The $209 million withdrawn from Lido Finance is noteworthy because it stresses the magnitude of Lido‘s importance to Ethereum’s Proof-of-Stake infrastructure. As a liquid-staking protocol, Lido solves traditional staking problems, resource inaccessibility, and illiquidity by allowing users to stake ETH and remain liquid with traded stealth tokens.

Justin Sun (@justinsuntron) applied to withdraw 52,905 $ETH (now $209M) from #LidoFinance an hour ago.

This is part of the net 392,474 $ETH he allegedly bought at ~$3,027 ($1.19B) via 3 wallets from Feb-Aug, now having an est. total profit of $349M (+29%).

Note that on Oct 4,…

— Spot On Chain (@spotonchain) December 16, 2024

Lido enables more than 30% of all staked ETH on the network, making it one of the backbones of Ethereum‘s PoS mechanism. Big withdrawals such as Justin Sun’s withdrawal raise questions about staking liquidity and possible market effects. Though Lido‘s liquid staking solution does make tokens more accessible, the fear of sudden large-scale withdrawals reveals a critically vulnerable point in staking protocols. Such moves can fuel fears of reduced liquidity. One such incident can be traced back to Aug. 5 of this year, when withdrawals, possibly by whales, dropped ETH’s price from $3317 to $2419.

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The chart tracks ETH exchange outflows (green bars) and price movements (black line) throughout 2024. Spikes in outflows often align with volatility, while Ethereums price surged to $3.9K in December, reflecting increased activity amid market movements.

Although Lido withdrawals are not immediate, given that they must go through the Ethereum staking queue, such large moves can be indicative of market changes, especially if multiple large stakeholders follow suit, causing an imbalance between staked and unstaked assets.

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Aside from the ETH withdrawal, Sun deposited $964K EIGEN to HTX, a crypto exchange. Eigen (EIGEN) is the native work token for EigenLayer, a protocol that strengthens blockchain security by allowing the restaking of collateral against intersubjective faults. This deposit further indicates that he aims to diversify the liquidity across established tokens and other high-risk tokens he might own.