$24 million lost in second-largest day of DeFi liquidations

Published at: Feb. 23, 2021

The Feb. 22 crypto crash has sparked the second-largest volume of DeFi liquidations in the sector’s history, with more than $24.1 million worth of loans being forcefully closed within 24 hours.

According to crypto data aggregator DeBank, $13.7 million, or nearly 60% of the losses occurred on Compound, followed by Aave with $5.4 million worth of liquidations.

Yesterday’s liquidations were the second-largest to hit DeFi, trailing behind the $93 million in margin calls that were triggered by a sudden increase in the price of DAI on Nov. 26. 2020. The incident saw DAI spike by 30% on Coinbase Pro — the source of Compound's price oracle — liquidating more than $88 million worth of crypto loan collateral on the protocol.

DeBank also reported a decline in total value locked from $44.5 billion to $38.8 billion over the past 24 hours. The 12.8% decline marks the largest single daily drop since the DeFi markets shed 15.4% on Jan. 21.

The liquidations may have been exacerbated by the recent extreme gas fees associated with using the Ethereum mainnet, with traders being quoted up to $30 for simple token transfers.

With crypto users racing to outbid each other and ensure their transactions were met, network congestion amid rapidly tumbling prices may have prevented some traders from closing out their positions in time.

The flash-crash has had a devastating impact on margin traders as well as DeFi users, with Kraken users have also demanding compensation for mass liquidations caused by an accelerated crash that saw ETH drop to $700 on Kraken while the asset was changing hands for roughly $1,400 on other exchanges.

Major corporations that have invested heavily in Bitcoin also saw multi-million draw-downs amid Feb. 22’s price action that saw $9,000 wiped off the price of BTC over just a few hours.

Tesla, which purchased $1.5 billion on Feb. 8, would have lost over $200 million in the crash while MicroStrategy, which holds the most Bitcoin of any public company, would have been down over $330 million at the time of the dip.

At the time of writing, however, Bitcoin had recovered to trade at $50,800 to hover at a daily price decline of around 9%.

Tags
Technology
Defi
Related Posts
No-collateral lending protocol Teller opens public alpha to NFT holders
Teller Finance, a project building an undercollateralized lending protocol for decentralized finance, has announced the launch of its mainnet alpha stage. This will enable certain users to obtain credit without being required to post collateral, which is the case for most other DeFi lending protocols. The Teller alpha will be accessible only to holders of a special nonfungible token, called the Fortune Teller NFT. The tokens will be sold on Thursday, with half of the proceeds of the sale going to the protocol’s liquidity pools, and the remaining half will be used to fund development. Only $10 million in total …
Technology / March 23, 2021
Warp Finance reportedly loses up to $8M in flash loan attack
DeFi lending protocol Warp Finance has reportedly suffered a flash loan attack resulting in the loss of as much as $8 million in digital assets. Reports are coming in that an attacker has made off with between $1 million, to as much as $8 million according to DeFi Prime. The losses follow a series of flash loans that have exploited vulnerabilities in the Warp Finance protocol. Warp Finance is a new DeFi platform announced in early November that enables users to deposit liquidity provider (LP) tokens from other protocols and receive stablecoin loans in exchange. The Warp Finance Twitter feed …
Technology / Dec. 18, 2020
Yearn Finance announces another ‘merger’ with the Cream lending protocol
Two days after Yearn Finance (YFI) and Pickle Finance joined forces in DeFi’s first effective merger, Yearn founder Andre Cronje published details of another upcoming integration with Cream, a lending protocol similar to Compound and Aave. The blog post, published on Thursday, outlines how the two protocols will cooperate for the launch of Cream V2. As part of the partnership, the teams will merge development resources and introduce several symbiotic interactions between the two protocols. Yearn users will be able to put their vault tokens — their share in a yield farming strategy fund — as collateral to borrow on …
Technology / Nov. 26, 2020
DAOs need checks and balances to have better governance
Over the past few years, decentralized autonomous organizations (DAOs) have introduced a clear paradigm shift in blockchain governance. With their community decision-making and adherence to hardcoded rules, they have challenged the role of hierarchy and central authority that are present in modern organizations, especially as it pertains to business. Ideologically, DAOs have a lot in common with democracies: individuals holding an amount of a DAO’s specific token can allocate those tokens as votes on governance proposals. Once voting has concluded, the final outcome is executed autonomously by smart contracts. In functional democracies, however, citizens elect representatives to legislate laws and …
Decentralization / Oct. 18, 2022
Cosmos Interchain Foundation allocates $40M for ecosystem development in 2023
According to a medium post on Feb. 20, the Interchain Foundation (ICF), a non-profit organization behind the creation of the Cosmos (ATOM) interblockchain communications (IBC) ecosystem, has committed to spending approximately $40 million in 2023 to develop its core infrastructure and applications. As a part of the Interchain Stack, which is utilized by around 50 blockchains, these include the Tendermint Core (and now CometBFT), Cosmos SDK, Cosmos Hub, and the IBC protocol. "Throughout the year, we envisage engaging other teams to deliver smaller, tightly defined tasks within each area of work. Such contracts will be to supplement the work of …
Adoption / Feb. 21, 2023