Over $5.4 million worth of collateral has been liquidated on defi platforms in the last 24 hours. The majority of these liquidations, totaling $4.2 million, were seen on Ethereum. Data from Parsec suggests that if ETH falls to $3,008, an additional $24 million could be liquidated, posing a risk of destabilization.

On-chain derivatives exchanges like GMX, Kwenta, and Polynomial have been key players in these liquidations, resulting in over $52 million in liquidations in a single day. When collateral is liquidated in defi, it means that assets provided as security for loans are sold off by the platform or protocol.

In defi lending, loans are often over-collateralized to mitigate cryptocurrency price volatility. However, a sharp drop in the market price of the collateral asset, such as Ethereum (ETH) in this instance, can trigger a liquidation event. The platform automatically sells the collateral to ensure loan repayment, often at a reduced market value, potentially causing losses for the borrower.

Ethereum is currently trading around $3,338, reflecting a 15% decrease over the past week. The overall crypto market cap has dropped by 3.5% today, with significant liquidations following a month-long rally.

For more insights, you may want to look into:

  • MicroStrategy now owns over 1% of Bitcoin’s total supply
  • ETH trading volume across defi protocols | Source: Parsec
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