The depreciation of the price of Ethereum leaves the risk of liquidation of millions of dollars at the decentralized finance ecosystem. Super -chain data show that this is a serious threat, especially on popular defi platforms such as Makerdao and Compound.
The risk of liquidation increases in defi loans
According to the data of the Defi Analysis Platform Fashion Show, Ethereum -based loans are only 20 percent away from the position of approximately $ 319.8 million.
Most of these risk positions are collected on leading defi lending platforms such as Makerdao and Compound. Especially Makerdao, while the total risk of $ 229 million, while compound users may lose the amount of approximately $ 17 million.
If the price of Ethereum falls below $ 1,800 and approaches $ 1,750, it may be possible to liquidate a collateral of approximately $ 246 million.
Ethereum Price and Liquidation Scenario
According to the data, the price of Ethereum was around $ 1,872 at the time of writing. A decrease of 19 percent from this level can trigger a large wave of liquidation by pushing Ethereum into the hazard zone. Such a scenario can affect not only borrowing, but also a wider defi ecosystem.
The wave of liquidation refers to public liquidations triggered by the fall of prices. In this process, large sales take place, which deepens the decline in the market. Chain effects can increase market instability by leading to new liquidations.
Such a domino effect can adversely affect the liquidity of defi platforms and make investors’ efforts to protect their positions even more difficult.
These decreases in the price of Ethereum can seriously affect not only borrowing, but also the general defi market.
WHAT SHOULD BE EXPECTED?
The possible liquidation wave, which can be triggered by Ethereum’s price drop, once again reveals the fragile structure of the defi ecosystem. In particular, the risks that concentrate on platforms such as Makerdao and Compound require investors to be more careful to secure their positions. If Ethereum falls below the critical support levels, a chain of liquidation may cause liquidity problems and greater losses throughout the market. Therefore, it is of great importance that investors strengthen risk management strategies.
