Goldman Sachs Says DeFi’s Interconnections Can Increase Systemic Risk

Goldman Sachs says DeFi’s interconnections can increase systemic risk. According to the report, contagion risk related to $UST’s depegging hit staked ether ($stETH) because of Lido’s exposure to the Terra ecosystem. The collapse in $UST hit $stETH, with the token trading at a 4.5% discount to $ETH, Goldman said. That’s because $stETH holders were able to convert their tokens into bonded ether ($bETH) and earn rewards on Terra’s Anchor Protocol. As a result $stETH was vulnerable to Terra blockchain halts, which impact withdrawals.