THORChain (rune) 
Aave Successfully Processes $210 Million in Liquidations Without Adding to Bad Debt
Decentralized Lending Protocol Passes Stress Test Amid Market Volatility
Decentralized lending protocol Aave has successfully processed $210 million in liquidations without adding to its existing bad debt. The liquidations occurred following Monday’s flash crash, which wiped out roughly $2.2 billion in crypto market value. The extreme market volatility led to a sudden spike in liquidations across the protocol.
Managing High Volatility Without Accumulating Bad Debt
Typically, periods of high volatility create the circumstances for bad debts due to multiple liquidation requests, steep price declines, and low demand. However, Aave managed to scale through what amounted to a stress test without adding any fresh debt. In fact, the protocol reduced its existing bad debt total by 2.7 percent due to a reduction in value of the bad debt assets.
According to an analysis by Chaos Labs, “Liquidations were executed efficiently across the protocol, most of which were performed on the Ethereum Main instance. The robust risk management mechanisms within Aave ensured that the collateralized positions were settled as intended, minimizing protocol losses.”
Breakdown of Liquidations
A breakdown of the liquidations shows that WETH accounted for $96 million, while WBTC accounted for $25 million. $20 million worth of weETH was also liquidated, as well as $11 million worth of wstETH. A basket of smaller assets, including rETH and cbBTC, made up the remaining recorded liquidations.
Market Response
The market’s response to Aave’s performance was full of praise, with analysts commending the protocol for holding up to scrutiny. Bitwise CIO Matt Hougan tweeted, “Aave is so good. When I want to show TradFi investors the magic of DeFi, I usually show them @aave.”
Aave’s Expansion Plans
Recently, Aave confirmed its deployment on the Aptos testnet, its first-ever non-EVM deployment, as part of its ambitious plan to expand deployment to 6 new chains, including Aptos, Botanix Labs’ Spider Chain, Linea, Mantle, and Sonic.
Stay Up-to-Date with Global Crypto News
For more news on Aave, decentralized lending protocols, and the latest developments in the world of cryptocurrency and finance, visit Global Crypto News.
