What if liquid-restaking redemption queues seize up in a panic?
An LRT panic overwhelming redemption queues forces fire-sale discounts that bleed into money markets, so liquid-restaking tokens trade below NAV and the leverage loops built on them unwind into ETH. Rhymes with the stETH depeg in the Jun-2022 Celsius/3AC unwind — same mechanic of an illiquid staking derivative discounting while the exit queue backs up. Forward angle: restaking stacks slashing/AVS risk on top of staking, so an LRT depeg carries fatter tail losses than plain stETH did, and the money-market contagion path is the one to watch — liquidity tag is right.
Every number ships with its receipt — the odds, the range, the precedents, and a public grade at Reality Check. The statistical machinery that produces it is proprietary.
The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (electric blue) over time vs the market's (Polymarket, amber), from the past toward the 6–18 months horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. Loading the probability audit trail…
What it would mean
If this plays out, it is a mixed shock. A panic across liquid-restaking tokens overwhelms redemption queues, forcing fire-sale discounts and contagion into money markets. The trigger decomposes into signed root‑shocks — Crypto confidence ▼ · Crypto liquidity ▼ — which propagate through our causal graph to the markets below.