Justin Sun Withdraws $209 Million in ETH from Lido

Justin Sun, founder of TRON, has applied to withdraw 52,905 ETH, valued at $209 million, from Lido Finance. The move follows his ongoing Ethereum accumulation strategy, under which he allegedly acquired 392,474 ETH at an average price of $3,027, now reflecting an estimated profit of $349 million.

This withdrawal isn’t Sun’s first major ETH move. On October 4, 2023, he unstaked 80,253 ETH worth $131 million from Lido and transferred the assets to Binance within days. That event preceded a 5% drop in Ethereum’s price, fueling speculation about potential sell-offs after large-scale withdrawals.

Lido’s Role in Ethereum and Market Concerns

Lido Finance plays a critical role in Ethereum’s Proof-of-Stake (PoS) infrastructure, enabling liquid staking for over 30% of all staked ETH on the network. The protocol addresses traditional staking limitations, offering stETH tokens for liquidity while staking ETH.

However, large withdrawals like Sun’s raise concerns about the fragility of liquid staking systems. Analysts warn that substantial unstaking events may reduce liquidity and impact market stability. Historical data shows that whale movements, such as those in August 2024, have triggered notable Ethereum price drops.

Though Lido withdrawals must navigate Ethereum’s staking queue, they often signal shifts in market dynamics. Observers worry that additional significant withdrawals could imbalance the ratio of staked to unstaked ETH, intensifying volatility.

Strategic Diversification

Apart from withdrawing ETH, Sun recently deposited $964,000 worth of Eigen (EIGEN) tokens to HTX, a crypto exchange. EigenLayer, the protocol behind the token, enables collateral restaking to enhance blockchain security. This move suggests Sun is diversifying liquidity across platforms and assets.

Sun’s withdrawal highlights the dual-edge nature of Ethereum’s liquid staking model. While protocols like Lido offer flexibility and accessibility, they remain sensitive to the movements of large stakeholders, whose actions can ripple across the broader crypto market.