DeFi Liquidations Reach $350M Daily High Amid Market Volatility
DeFi Liquidations– On-chain liquidations across decentralized finance (DeFi) protocols on Ethereum have hit a new yearly high, with over $350 million in positions liquidated in the past 24 hours, according to Parsec Finance.
This spike comes amid increased market volatility and a widespread crypto market selloff. Earlier today, Bitcoin dropped to its lowest level since February, falling below $53,000, while Ether hit a six-month low, trading around $2,300. The majority of these liquidations were concentrated in three major assets, impacting lending protocols like Aave. ETH collateral faced the brunt of the liquidations, totaling $216 million in the past day. Wrapped staked ETH (wstETH) followed with $97 million in liquidations, and wrapped Bitcoin (wBTC) saw significant liquidations of $35 million.
In the midst of this liquidation surge, Aave founder Stani Kulechov reported that the decentralized lending platform earned $6 million in liquidation fees.
This surge in liquidations is likely due to a combination of factors, including sudden downward price movements across the broader market.
FAQs
What are DeFi liquidations?
DeFi liquidations occur when a decentralized finance (DeFi) protocol forcefully closes a trader’s leveraged position because they cannot meet the required margin. This typically happens when the value of the collateral backing the position falls below a certain threshold.
What caused the recent surge in DeFi liquidations?
The recent surge in DeFi liquidations was driven by significant market volatility and a broad selloff in the cryptocurrency market. Major cryptocurrencies, including Bitcoin and Ether, experienced sharp declines in value, leading to increased margin calls and subsequent liquidations.
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