Justin Sun, the founder of Tron, drew attention to a critical danger of the Ethereum network. According to Sun, the use of high leverage in Ethereum puts defi projects and protocols at great risk. If this problem is not solved, there may be great losses in the market.
High leverage danger in Ethereum
Justin Sun says that the use of leverage in the Ethereum network has reached dangerous dimensions. Especially on central and decentralized platforms, excessive leverage is used in transactions with ETH. This can lead to great liquidations when price volatility increases.
The leveraged transactions allow investors’ capital to be more than a lot of transactions. However, high rates such as 50x and 100x can cause major losses when the price moves hard. Sun addresses the Ethereum team and emphasizes that this problem should be solved before growth.
Ethereum defi ecosystem under threat
Ethereum is used as collateral in many defi protocols. If ETH price falls hard, large -scale liquidations may be experienced. This can deepen decreases by creating a domino effect on the market.
Currently, Ethereum is estimated to have a $ 50 billion leverage position. This corresponds to 11-14 %of the total market value. Daily liquidation volumes have reached 50-70 million dollars.
Ethereum recovered after the price of the price
Ethereum lost 15 %in the last 24 hours and fell to $ 1,811. However, it then recovered by 6 %to $ 1,920. This movement resembles Bitcoin’s fell below $ 80,000 and rises again.
The market faces high leverage risks. If the Ethereum team does not interfere with this problem early, much larger losses may occur. While harsh movements continue in the crypto market, investors should be cautious.
Is there a solution for ETH?
Justin Sun argues that the Ethereum team should intervene in this problem early. According to him, it is imperative to limit the use of leverage and create a more sustainable market structure. Otherwise, investors and defi projects may be damaged. The future of Ethereum depends on the measures to be taken. If the leverage problem is not controlled, larger fluctuations may be inevitable. Investors should carefully monitor their investments in this uncertainty environment and be careful against the turmoil in the market.
