- The recent dip in Ethereum (ETH) prices to $1,807.77 has put DeFi protocols at risk of major liquidations, with Maker facing potential losses of $229 million due to vulnerable whale positions.
- Additionally, spot selling pressure from large ETH transfers to Binance could further destabilize prices, highlighting the volatility and risks within the DeFi ecosystem.
The world of decentralized finance (DeFi) is once again witnessing significant liquidations as Ethereum (ETH) prices plummet. The recent dip in ETH to a low of $1,807.77 has pushed DeFi protocols to the brink, threatening the liquidation of major whale positions. Maker, a prominent DeFi platform, has become a focal point with two major loans holding $229 million in ETH.
Whales on the Brink of Liquidation
The most vulnerable whale currently faces liquidation at a price of $1,787.86, holding a $68 million loan in DAI with a collateral ratio of 171%. Despite the potential risk, the whale may still retain DAI and other assets, but if liquidated, the seized ETH could flood the market and trigger further selling pressure. The second whale has a slightly safer margin with a liquidation price of $1,701.54, backed by a $74 million loan in DAI and a collateral ratio of 153%.
Broader Market Implications
The looming DeFi liquidations are part of a larger trend, following a day where $217 million was liquidated across crypto markets, including $63 million in ETH. Long positions are being wiped out rapidly, with one whale’s $12.55 million long position liquidated in minutes. These liquidations have led to a drop in open interest from $9.9 billion to $9.38 billion, reflecting traders’ cautious approach and decreased exposure.
Spot Selling Adds Pressure
On top of DeFi liquidation risks, ETH is facing downward pressure from spot selling. One whale recently sent 6,131 ETH to Binance, valued at over $10 million, indicating a potential large-scale selloff. This move could further strain the ETH price, creating additional challenges for DeFi protocols.
The current situation highlights the inherent risks in leveraged positions within DeFi protocols. As ETH prices remain volatile, large liquidations could trigger cascading effects, impacting the entire ecosystem. For investors, the ongoing developments serve as a reminder to carefully monitor collateralized positions and manage risk in the unpredictable crypto landscape.