Shaurya Malwa · 5 hours ago · 2 min read
DeFi sees second-largest liquidation in history as crypto market dips
Yesterday’s decline of the crypto market has triggered the second-largest wave of liquidations in decentralized finance’s (DeFi) history as a total of $24.1 million worth of positions got wiped, according to metrics platform DeBank.
The largest amount of collateral was liquidated on DeFi platform Compound ($13.7 million), followed by Aave with $5.4 million.
Previously, the largest wipe to date occurred on November 26 last year, when an instant increase in the value of DAI stablecoin resulted in the liquidation of $88.4 million worth of positions on Compound. At the time, DAI’s price on Coinbase Pro, which Compound’s oracles used to obtain benchmark rates, jumped by 30%.
Additionally, the total dollar value locked (TVL) in the DeFi sector dropped from $44.5 billion to $38.5 billion yesterday, according to DeBank. This is the single largest daily TVL decline ever.
Yesterday, Bitcoin’s price plunged by $10,000 while the price of Ethereum (ETH) on crypto exchange Kraken dropped to as low as $700. At the same time, ETH was traded at around $1,400 on other exchanges.
In addition to increased market volatility, the sheer amount of liquidations was also catalyzed by a high load on the Ethereum blockchain, which impeded the normal functionality of DeFi services and prevented traders from closing their positions in a timely manner.
— Bybt (@bybt_com) February 23, 2021
Another consequence of the market decline on Monday was a temporary drop in the value of institutional investors-owned Bitcoin by $13.6 billion.
According to Bitcoin Treasuries, the value of 1.3 million BTC held by 41 companies fell from $76.7 billion to $ 63.1 billion. MicroStrategy, for example, now has $3.465 billion worth of BTC, whereas yesterday the value of its assets was estimated at $4.1 billion.
Meanwhile, nearly 475,000 traders have been liquidated in the Bitcoin futures market over the last 24 hours, Bybt’s data shows.
“In the past 24 hours, 474,968 traders were liquidated. In total $4.4B was liquidated! This is the craziest day in Bitcoin futures history,” Bybt tweeted today.
For more information, explore all DeFi coins on CryptoSlate.
Get an edge on the cryptoasset market
Access more crypto insights and context in every article as a paid member of CryptoSlate Edge.
Join now for $19/month Explore all benefits