History repeats itself. The global financial crisis of 2008 was caused by the proliferation of surrogate CDO securities in the United States that promised increased profitability. The same mechanism led to the fall of the crypto market, where the decentralized finance sector promised increased remuneration from investments. The problem is that the scheme only works in a growing market.


CDOs are securities (collateralized debt obligations) issued by various financial institutions. Mortgage CDOs (which included MBS) flourished the most during the American construction boom of 2003-2007. There were many different forms and combinations of CDOs, let’s analyze a primitive scheme to understand the process.

The bank issues mortgage loans. Paying off loans, customers generate profit. At the same time, the bank issues CDOs in which these loans are included in the form of an investment strategy, promising to share part of the profits with investors.

Under balanced conditions, the scheme looks working. However, in practice, the cost of housing was constantly growing, followed by loan rates. At the same time, in order to maximize profits, banks reduce the requirements for borrowers, offering loans to low-income customers, and sometimes completely neglecting to check their financial benefits.

Being a security, CDOs were traded on the market and used as collateral for collateral. Later, synthetic CDOs appeared, and the connection between the financial and the real sector became more and more subtle.

By the end of 2007, the market was fed up, sales fell, and some customers were unable to make a mortgage payment on time. Banks, in turn, faced a crisis that instantly turned from a mortgage crisis into a financial one. All the financial instruments tied to the CDO fell down.


The decentralized finance sector has a lot in common with CDOs. Investors deposit cryptocurrency to get a guaranteed return from holding a position (staking). At the same time, a number of platforms instead of the attracted cryptocurrency offer their “CDOs” – tokens for trading or use as collateral.

For example, Ethereum can be frozen directly when creating a node, but it is more expensive (you need to deposit 32 ETH each), and the coin will be “frozen” before switching to PoS.

At the same time, the Lido service offers to freeze any amount of ETH and get stETH in return. The token can be used in other bets as collateral and converted back to ETH.

While the market was growing, everyone liked the convenience of using stETH. The token was bought not only by ordinary users, but also by investment crypto funds. However, when the market fell, a liquidity crisis arose. As a result, the stETH rate no longer corresponds to the parent cryptocurrency, and there are fewer funds left in the pools that provide the possibility of exchange. So, in Curve, 491 thousand stETH now accounts for only 110 thousand ETH.

On the verge of bankruptcy, Celsius and Three Arrows Capital (3AC) also invested in stETH and used the token for betting. By remortgaging coins, they promised investors increased profitability. For example, back in September, Celsius promised up to 17% per annum. Now the company has blocked clients from withdrawing, which has already aroused the interest of a number of regulators in the United States.

3AC is hastily selling off some of its crypto assets in order to increase the collateral for open positions. According to the Financial Times, 3AC has already lost some positions due to margin call, losses amount to at least $400 million.