Renzo Protocol’s restaked Ether token (EZETH) suffered a price depeg on April 24.

The depegging incident saw the token’s price briefly fall to a low of $688 on Uniswap decentralized exchange, before recovering its price parity with Ether (ETH), according to Dexscreener data.

ezETH/WETH, 15-minute chart. Source: Dexscreener

The incident was likely caused by a wider sell-off, following the conclusion of Renzo Protocol’s season 1 airdrop, according to pseudonymous crypto analyst Tommy, who wrote in an April 24 X post:

“Sell-off likely caused by the conclusion of Season 1 Airdrop, users want to get back $ETH to farm other [liquid restaking tokens] LRT/protocols.”

Renzo is the second-largest liquid restaking protocol, with over $3.3 billion in total value locked (TVL), which rose 126% during the past month. is the largest liquid restaking protocol, with over $3.9 billion in TVL, according to DefiLlama.

Similar depegging incidents are a growing pain for liquid restaking tokens (LRTs), according to the popular crypto analyst:

“On the depeg, it is a risk that we need to recognize for all LRTs, even if withdrawal is enabled, the DEX pool can still depeg simply based on the temporary imbalance.”

The depeg led to mass liquidations on leveraged protocols like Gearbox and Morpho Labs, with loopers, or users who repeatedly use LRTs as collateral to borrow ETH for leverage, suffering the biggest losses, according to the analyst.

Renzo protocol has fostered increased interest after its incoming token (REZ) was added to the Binance launch pool on April 23, the same day the protocol announced its incoming airdrop.

Renzo allocated 10% of its token allocation to the season 1 airdrop.

Related: Hong Kong Bitcoin and Ether ETFs officially approved to start trading on April 30

Trader profits nearly $400,000 in two hours on ezETH depeg

Crypto trader czsamsunsb.eth made a profit of 121.65 ETH, worth over $396,000, in just two hours after Renzo’s depegging incident, according to on-chain intelligence firm Lookonchain, that wrote in an April 24 X post:

“czsamsunsb.eth made 121.65 $ETH in just 2 hours after $EZETH (Renzo Restaked ETH) depegged! He spent 4,099 $ETH to buy 4,221 $EZETH successfully, making 121.65 $ETH!”

Czsamsunsb.eth trading history. Source: Lookonchain

Related: ‘Money-hungry VCs’ are bad for token launches in the long term — Analyst