Crypto Whale Dodges Liquidation After Last-Minute ETH Transfer

Crypto Whale Battles Ethereum’s Decline to Avoid $16M Loss

Crypto Whale– A crypto whale came dangerously close to incurring a $16 million penalty on a $75 million loan on Maker’s decentralized platform, just as Ethereum (ETH) prices edged closer to triggering liquidation. According to on-chain data, the whale, who has been active since 2021, was minutes away from liquidation when they intervened by adding 2,000 ETH as collateral.

At around 2:10 p.m. ET, “DeFi Dan” on X shared an update, stating, “First big liquidation now seems all but guaranteed to incur a $16.5M penalty.” The whale, who had not made any changes since November, was racing against the clock to avoid liquidation. Just before the deadline, the whale transferred ETH from Bitfinex, bringing their liquidation price from approximately $1,932 to $1,874.98, allowing more breathing room.

Despite the intervention, the risk of liquidation remains high, as ETH remains volatile and could still fall below the liquidation price.

ETH’s Volatility and Liquidation Risks

The whale’s position is under constant pressure, as ETH has dipped below $2,000 for the first time in months. While adding more ETH to the collateral could lower the liquidation price further, the only way to completely mitigate the risk is to repay the loan. Niklas Kunkel, founder of Chronicle Labs, explained that if ETH falls below $1,874.98, liquidation will be triggered after a one-hour delay, with the next trigger set at $1,850.36.

When a vault is under-collateralized and liquidated, Maker imposes a liquidation penalty, adding the fee to the remaining debt. The collateral is auctioned off, and if the loan cannot be fully repaid, the user must cover the remaining balance plus the penalty. This system is part of Maker’s decentralized finance (DeFi) model, which reduces human bias by relying on smart contracts.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.