The two large crypto whales are in danger of liquidation of the loans they receive on Makerdao. These two whales put a total of $ 230 million Ethereum (ETH) as collateral.
Crypto whales are in danger of liquidation
These high -valuable two defi users are at risk of losing $ 230 million in total if Ethereum continues to depreciate. Makerdao protocol by showing the ether tokens as collateral, these users, now on the verge of bankruptcy has come to the brink of bankruptcy.
The price of Ethereum has declined continuously throughout last year. If the price of Ethereum falls below $ 1,787, Makerdao will start to pay the debts by selling the Ether guarantees of these whales. This will create more pressure on the crypto market, which is already in a difficult situation.
Ethereum price is currently trading at $ 1,789. Therefore, whales need to quickly add more collateral or pay their debts. Otherwise, they will face great losses.
The other whale Ethereum will be liquidated if the price falls to $ 1,700
The other whale tried to gather the situation by putting additional collaterals and paying a part of the debt. However, if the price of Ethereum falls to $ 1,701, this user will be liquidated.
This reveals the programatic nature of the work of defi protocols without the need for external intervention. It also shows how Defi’s transparent structure reveals events that prepare the ground for potential market movements.
Makerdao and ‘Health factors’
Makerdao allows users to create DAI Stabilcoin and take them as debts by locking variable crypto currencies such as Bitcoin or Ether. Unlike defi lenders such as Aave, Makerdao is the only lending in the protocol.
When users deposit collateral and borrow the EMI, a “health factor” is assigned to their positions. This health factor represents the ratio between the deposited collateral and the EMI taken.
If a user’s health factor falls below 1, Makerdao automatically liquidates the collateral. This is done to prevent the protocol from accumulating bad debt.
The health factors of the two whales are 1.01 and 1.06, respectively. This shows that the risk of liquidation of loans is quite high. When large defi liquidations occur, it can reduce the price of the asset used as collateral, which trigger more liquidation and create a domino effect.
There was a similar situation in February. President Donald Trump threatened to implement a 25 %customs tariff to imports from Canada and Mexico, but postponed this decision a day later.
Due to the panic in the market, the price of Ethereum fell by 17 %in just a few hours. This caught the lenders on Aave unprepared and 700 users were liquidated in total of 198 million dollars.
In the coming days, investors will follow these two whales carefully. One of the whales has begun to pay its debt and is trying to actively take precautions to avoid liquidation.
However, the other whale has not carried out any Ethereum transactions since March 11th. If the price of Ethereum continues to decrease, it seems inevitable for these whales to experience great losses.
