Comment by @punkess • Hey

can you pls Eli 5 why EL can cause a leveraged liquidation cascade? 🤔 I think i understand why it’s leveraged risk (to loose eth due to slashing, but this

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The issue, to me is that a significant slashing can begin a deleveraging event. It’s more about LP. A significant instantaneous price drop could begin liquidations, which would dump a ton of LSTs at discount to the market, which would likely lead to a depeg. This is why I favor an nLRT because it has less inherent risk because it cuts out the LST intermediary in restaking.