Ether.Fi (ETHFI) Faces the Ultimate Test: Can It Withstand the Arrington XRP Storm?

The post Ether.Fi (ETHFI) Faces the Ultimate Test: Can It Withstand the Arrington XRP Storm? appeared first on Coinpedia Fintech News

ETHFI, the governance token of Ether.fi staking protocol, tumbled almost 30% post its trading debut. Listed on Binance and OKX, the price of ETHFI took a significant hit. Originally valued at $4.13, the token has since experienced a considerable drop of over 25%, which has raised concerns among investors regarding its stability and prospects.

ETHfi May Undergo Potential Sell-offs? 

After its listings in the top exchanges, ETHFI faced a significant drop of over 23%, prompting traders and investors to take action. Despite substantial accumulation, the 24-hour volume plummeted by 66% to around $223 million. 

On the other hand, on-chain activity has raised grave concerns about potential sell-offs, adding to the downward pressure on ETHFI’s price. Initially trading the green zone with $4.13, is now tumbling to hold support near $3. 

We spotted some interesting activity by Arrington XRP Capital on @ether_fi

1. minted 5k $eETH and sent this across 10 wallets (500 $eETH per wallet) last month
2. claimed $ETHFI in each wallet (total: 200,498) and sent funds to another address
3. sent all $ETHFI to Binance pic.twitter.com/YqsJUXjWtO

— Nansen (@nansen_ai) March 18, 2024

Nansen, a blockchain analytics firm, highlighted activity involving Arrington XRP Capital on the Ether.fi platform, fueling investor apprehension. Nansen went deep into the analysis and found that Arrington XRP Capital strategically used Ether.fi. The venture capital fund initially issued 5,000 eETH, the platform’s token. These tokens were distributed to ten 500-unit wallets. Arrington XRP Capital then claimed 200,498 ETHFI tokens from these accounts. The obtained tokens were combined and moved to another address, likely for Binance sale.

Ether.fi Response 

In response to concerns about Arrington XRP Capital’s recent activity on Ether.fi, the platform clarified that Arrington XRP Capital has been a consistent supporter since the beginning. The protocol stated they were aware of the multi-wallet distribution strategy in advance, and it didn’t change the outcome. They explained that consolidating the assets into one wallet wouldn’t have made a difference. These assets are part of their actively traded liquid funds, and transferring them to Binance was driven by trading and liquidity needs.

It’s Not a Sybil attack!

Arrington Capital on the flip side, emphasized their long-term investment in the platform, having staked over $50 million worth of ETH since February 2023. The company clarified that the recent sale of a small portion of their initial airdrop tokens amounted to less than $700,000, representing only 0.1% of the day’s trading volume.

Overall, Arrington Capital claimed they did not exploit the protocol’s distribution process or launch a “Sybil attack”. They emphasized their commitment to the platform and that their measures had little influence on trading volume.