The recent drop in ETH price has caused panic in the Ethereum community with now two whale’s $238 million worth of Maker vaults nearing liquidation risk.
A recent post from Lookonchain reveals that two Ethereum whales who have supplied 125,603 ETH – worth approximately $238 million – while borrowing $143.68 million of DAI against it, are on risk of being liquidated if ETH price drops below $1,805 and $1,787 respectively.
The health rate for both the whales have reached 1.05 and 1.06, indicating a severe risk on their collateral as it reaching 1 would result in market selling of all ETH held in their respective vaults.
In the DeFi landscape, such practices like this are common with a number of traders moving their capital here and there in order to maximize profits. DeFi traders often lock their funds at one respective protocol while borrowing funds from it and using it to generate more yields.
All the user funds supplied to Maker – such as ETH in this case – are held into a non-withdrawable Vault when the supplier decides to borrow DAI against it. Maker (now known as Spark) allows users to borrow up to ⅔ amount in DAI while mandating a collateral ratio of 150% in Vaults.
At the time writing, ETH is trading near $1,870 – down 2.2% in the past 24 hours. The further downside in ETH price would make these whales lose their ETH unless they supply more ETH to their respective Maker Vaults.
