ETH market faces $500 million liquidation if price drops below $2,100 - BitcoinEthereumNews.com
An automatic liquidation of $500 million in ether (ETH) could occur on-chain if its price falls below $2,100, causing a Maker vault holders position to become under-collateralized and putting further downward pressure on the second-biggest cryptocurrency. As Russias invasion of Ukraine roils crypto markets, a pseudonymous Maker vault holder called “7-Siblings” could see $500 million in ETH seized and sold if the price drops another 14% from its current level, according to data from Block Analitica. The market drama comes less than a month after the same investor narrowly escaped a $600 million liquidation. Going by Block Analiticas data, 7-Siblings has multiple debt positions on Maker vaults totalling about $500 million. All these positions have liquidation prices in the region of $2,100. If ETH falls below this level before 7-Siblings can re-collateralize, then they will lose their collateral as the system liquidates the funds. To understand the issue at stake, here‘s a brief background of how Maker vaults work. Maker’s dai (DAI) stablecoin is backed by crypto like ETH. When an investor deposits ETH to a Maker vault, they get DAI in return. Because cryptos can suffer volatile price swings, the Maker protocol requires that all debt positions be over-collateralized. This means that deposits