20 March 2024
ETHFI, the governance token for the Ether.fi staking protocol has seen a significant drop in price since its debut on Binance on Monday, March 18. After initially trading at $4.13, the token has lost over 25% of its value, raising concerns among investors.
Nonetheless, recent on-chain activity has fueled speculation of further sell-offs, potentially threatening the token’s stability and its ability to hold the $3 mark. In particular, blockchain analytics firm Nansen has identified interesting behavior involving Arrington XRP Capital on the Ether.fi platform, highlighting some significant transactions.
Price Concerns For ETHFI
In a recent post on social media site X (formerly Twitter), Nansen’s analysis reveals interesting activity involving venture capital fund Arrington XRP Capital on the Ether.fi platform.
According to the blockchain analytics firm, Arrington XRP Capital minted 5,000 units of eETH, Ether.fi’s natively reshaped liquid staking token. Notably, these eETH tokens were distributed to ten different wallets, each containing 500 units.
Following the distribution, Arrington XRP Capital proceeded to claim a total of 200,498 ETHFI tokens across the ten wallets. The funds were transferred to another address, consolidating the acquired ETHFI tokens.
In the final step of the observed activity, Arrington XRP Capital sent the entire balance of ETHFI tokens to the Binance cryptocurrency exchange, potentially for selling purposes, which could put further pressure on ETHFI.
However, the Ether.fi team has responded to the speculation surrounding the on-chain movements made by Arrington XRP Capital.
Ether.fi Clarifies
According to Ether.fi, Arrington XRP Capital has been a consistent investor in the platform and has provided significant support since its inception. The statement further noted that as early adopters and active stakers, the Arrington team has actively staked its assets on Ether.fi, contributing to the platform’s growth.
The multi-wallet distribution observed in recent activity did not surprise Ether.fi, as they were reportedly informed of this approach in advance.
Ether.fi claimed that splitting the assets into multiple wallets did not provide additional benefits or change the distribution outcome. The protocol alleged that consolidating the assets into a single wallet would have produced the same results.
The protocol alleged that these assets are part of their liquid funds, which are “actively traded.” The decision to transfer the assets to the Binance cryptocurrency exchange was motivated by the nature of their trading activities and liquidity needs, the Ether.fi team concluded.
Arrington Capital Addresses Speculations
The Arrington Capital team also clarified the context through a social media post. They clarified that they had been long-term investors, staking over $50 million of ETH since February 2023.
The company claimed that the recent sale of a “small percentage” of its initial airdrop tokens amounted to less than $700,000, allegedly representing only 0.1% of the day’s trading volume.
Ultimately, Arrington Capital emphasized that their actions were not a “Sybil attack” and did not exploit the protocol’s distribution methodology. They wrapped up their response by claiming that airdrop distribution follows a linear model that is “unaffected” by distribution across multiple wallets.
Featured image from Shutterstock, chart from TradingView.com