Renzo scaled quickly by pushing ezETH into lending markets across multiple chains, where users borrowed against it to loop their positions for higher points accrual. That worked until the moment it needed to unwind.
What happened in April 2024
Withdrawals were not yet enabled, so the only exit was the secondary market. When airdrop terms disappointed, holders sold into thin liquidity, ezETH's price dropped well below the value of the ETH backing it, and leveraged positions collateralised by ezETH were liquidated automatically. Users who had done nothing and simply held a leveraged position lost real money to a price dislocation, not to a protocol failure.
The lesson generalises
An LRT is only worth its backing if you can redeem it. When redemption is disabled or queued and the secondary market is thin, the market price is the only price, and leverage turns a discount into a liquidation cascade. Renzo has since enabled withdrawals and liquidity has improved, but the structural point applies to every token in this category.
Where it stands now
Functioning withdrawals, audits in place, broad multi-chain deployment and a large deposit base. Its documentation of operators and secured services is thinner than ether.fi's, and the growth-first history is a reasonable input into how you weight its risk management.
Who should use it
Users wanting multi-chain LRT exposure who will not lever the position. Anyone considering a looped ezETH trade should have the April 2024 chart in front of them first.