Ethereum (ETH) holders are fighting liquidations as price sinks under $2,000

Ethereum (ETH) whales are facing on-chain liquidations, moving coins to cover their positions on decentralized protocols. Threatened DeFi liquidations are becoming more common as ETH sank under $2,000 and dipped as low as $1,700.

Ethereum (ETH) collaterals on decentralized protocols are under threat, as ETH dipped under $2,000. Several whales had to top up their collaterals to avoid liquidation in DeFi lending vaults. ETH dipped as low as $1,791.23, triggering several liquidation tiers on decentralized protocols. 

For one of the whales, the dip under $1,800 was enough to trigger liquidation for a total debt of $2.27M DAI. The liquidated collateral, however, was valued at $1.23M. 

The liquidation protocol now carries additional WETH, while the liquidated party still has the DAI issued for the loan. The borrowers may not be hurt by the liquidations, as they are a way to tap ETH value at a favorable price. However, the protocol now holds additional tokens, which may be sold on the market, or recycled as collaterals. 

One significant position is threatened if ETH falls by just another 6.4%. The loan is still 182% collateralized, but falls within the recently increased volatility for ETH. The position started to enter liquidation, although ETH price has now recovered and the vault retains its collateral. 

A large vault faces liquidation at $1,798.83, despite the 153.42% collateral ratio. This loan is at a higher risk if the price of ETH falls by just 5.9%. The borrower retained 75M DAI for other DeFi operations, but in case of liquidation, will leave over 60K ETH to the protocol. 

Some of the DAI holders have tried buying the ETH dip, though underestimating the volatility. One of the whales spent $30.8 DAI to buy more ETH, starting at $2,014. The position is still underwater, though ETH has attempted recoveries above $1,900.

Another dormant account posted additional collateral just in time after months of inactivity. The liquidation price for that whale is at $1,836 per ETH. 

One of the saving elements of DeFi are the specific oracles used in vaults. Maker’s oracle shows a slightly higher price, which may have saved some of the most vulnerable positions. DeFi also has additional protections against a cascade of liquidations. Despite this, the most recent ETH drawdown may cause a shift in ownership. After months of relatively stable prices, older whales that have deposited ETH are facing the most serious liquidation pressures. 

Maker lenders approach liquidation levels

One of the whales set up for liquidation was suspected to be the Ethereum Foundation . The lender’s wallet was identified by Arkham Intelligence as potentially, but not certainly, belonging to the Ethereum Foundation. However, Ethereum developer, Eric Conner later dismissed the identification of the wallet as not resting on evidence.

The Ethereum Foundation has announced its public address , which would most likely be used for DeFi operations. Previously, the Ethereum Foundation was criticized for selling ETH on the open market to cover operating expenses. For that reason, the Foundation already deposited ETH to Aave, Compound, and Maker, deploying $120M into the DeFi protocols.

The entity tried to cover its position by depositing an additional 30,098 ETH, valued at over $56M. 

The whale successfully lowered the liquidation price to $1,127, currently standing safely below the ETH trading levels. The loan is 244% over-collateralized, with 100,394 ETH locked for security. The borrower carries over $78M in borrowed DAI, with the option to generate another 53M DAI. 

ETH feels pressure from long liquidations

ETH saw over $238M in liquidations in the past 24 hours, a mix of long liquidations and attacks against short positions. Bybit is once again the leader, with over 83% in short liquidations. 

Ethereum liquidity shifted to short positions, with accumulation around $2,000 and at $2,200, pointing to a potential rally to attack those short positions. | Source: CoinAnk

ETH open interest is still down to $9.22B in 24 hours, as traders are more cautious. Long positions have not been replenished after a series of liquidations, and derivative trading has switched to accumulating liquidity in short positions. The most active accumulation is around $2,000 and the $2,200 range, signaling a potential relief rally for ETH.

The price shift toward attacking short positions may save the DeFi vaults from further pressure. Despite this, centralized derivative trading keeps affecting the DeFi sector. 

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