Renzo Protocol's ezETH (CRYPTO:EZETH) faced a peg loss to Ethereum (CRYPTO:ETH) amid a controversial REZ (CRYPTO:REZ) token airdrop, sparking community debate.

The incident resulted in ezETH temporarily losing its 1:1 parity with ETH, experiencing a price dip on Uniswap (CRYPTO:UNI) before recovering.

The depegging was attributed to a significant sell-off of ezETH following the conclusion of Renzo Protocol's season 1 airdrop.

This event led to mass liquidations in leveraged protocols like Gearbox and Morpho Labs due to users using ezETH as collateral to borrow ETH.

Despite the controversy, Renzo's TVL has surged by approximately 125% in the past month, driven by increased interest following Binance's Launchpool program for the native REZ token.