Report Shows On-Chain Liquidations Across DeFi Surpass $350 Million in 24 Hours

Why Trust Tech Report

Tech Report is one of the oldest hardware, news, and tech review sites on the internet. We write helpful technology guides, unbiased product reviews, and report on the latest tech and crypto news. We maintain editorial independence and consider content quality and factual accuracy to be non-negotiable.

Over the past 24 hours, on-chain liquidation on Ethereum decentralized finance (DeFi) protocols exceeded $350 million, marking a new yearly high.

The massive liquidation reflects the heightened market volatility and extensive sell-offs that have recently gripped the crypto market.

Amid the sell-offs, Bitcoin and Ethereum (ETH) declined significantly, dropping to multi-month lows. Meanwhile, centralized crypto exchanges witnessed massive futures liquidations, exceeding $1 billion in the past 24 hours. 

Spike in DeFi Liquidations

Data from analytics firm Parsec Finance reveals that this liquidation spike coincides with significant price drops in major cryptocurrencies.

Bitcoin, the largest cryptocurrency by market cap, plunged to its lowest since February, briefly falling below the $50,000 threshold. Ethereum, the second-largest digital asset, saw its value dip to approximately $2,300, marking a six-month low.

A closer examination of the data shows that the liquidations were heavily concentrated in three key assets, severely impacting lending protocols such as Aave.

Ethereum (ETH) collateral took the most brutal hit, with $216 million in liquidations over the past day. Wrapped staked ETH (wstETH) followed closely, with $97 million in liquidations, while wrapped Bitcoin (wBTC) liquidations totaled $35 million.

Amid this turmoil, Stani Kulechov, Aave’s founder, disclosed that the decentralized lending platform realized liquidation fees worth $6 million. This suggests that some DeFi platforms benefitted from the liquidation process despite the broader market downturn.

Experts believe the rise in liquidations is connected to certain factors, such as abrupt downward price movements. This has probably resulted in a series of margin calls and forced liquidations.

The scenario is a plain reminder of the risks inherent in the DeFi space, where collateralized positions can quickly become vulnerable to market fluctuations.

Meanwhile, centralized exchanges were not immune to the market turmoil. According to data from CoinGlass, futures liquidations on these platforms exceeded $1 billion within the past 24 hours, $900 million of which were in long-leveraged positions.

The impact was particularly pronounced for traders of Ethereum and Bitcoin, with over half a billion dollars worth of liquidations affecting these two assets alone.

Ethereum Price Takes the Bearish Path

On Monday morning, Ethereum took a steep dive of over 20% amid a struggling crypto market with fears of a looming global recession as Asian markets opened to turmoil. Over the past 24 hours, ETH has plunged 22%, dropping from approximately $3,000 to $2,280. 

The fallout from Monday’s events extended beyond just Ethereum. The entire crypto market recorded significant losses, with billions of dollars wiped out in value.

Earlier today, the overall crypto market cap dipped below $2 trillion, reaching about $1.89 trillion, according to CoinGecko. This marks the first time the crypto market valuation has fallen under $2 trillion since the bull run began earlier this spring.

These recent events highlight the connection between the DeFi and broader virtual currency markets. As prices of top crypto assets like Bitcoin and Ethereum fluctuate, traders remain cautious about sudden financial movements across various platforms.