Ethereum’s Price Drop Endangers $74 Million DeFi Loan on Sky
Ethereum's ETH fell nearly 10% to $1,820 on Monday, endangering a $74 million loan on the Sky lending platform. The borrower had pledged 65,680 ETH as collateral, previously valued at around $130 million.
- The loan's liquidation threshold is slightly above $1,900.
- The borrower withdrew 2,000 ETH (approx. $4 million) from Bitfinex and added it to the Maker vault, raising the collateral value.
- Post-deposit, the new liquidation level stands at approximately $1,875, still above the current ETH price.
- Additional loans face liquidation risks: $13.6 million at a $1,857 threshold and $117 million at $1,780.
- If ETH drops another 20%, $366 million in debt may be liquidated.
Liquidations can pressure collateral asset prices as protocols sell off liquidated collateral, worsening market conditions.