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$25M in DeFi Loans Liquidated as Ether Price Falls

The three-month high liquidation volume comes as Ethereum fees in dollar terms set a new record mark of $29 per basic transaction.

Feb 22, 2021 at 4:08 p.m. UTC
Updated Sep 14, 2021 at 12:15 p.m. UTC

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).

DISCLOSURE

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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