In simple terms, the unpredictability of cryptocurrency prices lately has caused a significant increase in the number of forced redemptions on Ethereum lending services. The amount of funds liquidated from these platforms in April has already exceeded previous record highs for this month, with half of it still remaining.
Liquidations are a frequent occurrence in the market, primarily taking place within the prominent lending platforms, Aave and Compound. With volumes of around $80 million and $50 million respectively, these two platforms serve as significant marketplaces for most liquidation events throughout the month. They collectively account for over 90% of all liquidations that have transpired this year.
In June 2022, the market specification was last terminated at an unusually high point. This occurred shortly following the $40 billion Terra ecosystem disaster, which resulted in compulsory liquidations across various lending platforms.
Over the last three days, traders who had wagered that cryptocurrency prices would rise (bullish bets) have experienced substantial losses due to market conditions beyond the lending markets. Reports indicate that approximately $1.7 billion in crypto assets have been liquidated as a result, with most of these losses affecting investors holding long positions.
Industry leaders, even those with solid reputations, have seen their financial stability jeopardized by recent market instability. For instance, Michael Egorov, the founder of Curve, faced potential liquidation due to the plummeting value of CRV, as reported by Colin Wu. Fortunately, Egorov was able to prevent this outcome.
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2024-04-15 12:36