Goldman Sachs highlighted an issue that interconnections between DeFi (Decentralised Finance) protocols could amplify the systemic risk. Goldman took the example of Lido Finance, a Liquid Staking protocol. A user can stake ETH tokens on Lido Finance and gets stETH (in 1:1 ratio) as a derivative token. Further, stETH can be used across DeFi platforms as collateral. The value of stETH was also affected by the UST collapse.
