$25M in DeFi Loans Liquidated as Ether Price Falls

Decentralized finance (DeFi) lending platforms liquidated some $25 million in assets Monday as the price of ether (ETH) plummeted as much as 15% to $1,655 before somewhat rebounding, according to the CoinDesk 20. That’s the highest amount in three months since Nov. 25 saw $93 million in liquidations.

  • Some 57% of liquidations worth $13.6 million came from lending platform Compound, followed by 33.2% on versions one and two of Aave worth an estimated $8 million, according to data provider DeBank.
  • “This was still a ‘small’ move and we still saw gas spiking to these crazy levels despite Binance disabling all exchange withdrawals,” one market maker who asked to remain unnamed said to CoinDesk. “I wonder what would happen with a move like we had it in March.”
  • High gas fees are a likely contributor to DeFi liquidations. Gas, denominated in ether, is needed to close out positions so as not to be liquidated. The average transaction fee hit unparalleled record highs Monday at $29 for a basic transaction, according to Blockchair.
  • DeFi lending platforms enable investors to take out overcollateralized loans. According to data provider DeFi Pulse, some $17.4 billion in assets are currently locked in lending markets with MakerDAO being the largest at $6.54 billion total value locked (TVL).