A crypto whale is narrowly avoiding a painful liquidation on Maker on Monday amid choppy crypto markets. Though he’s not out of the woods yet — as ETH continues to inch closer to his liquidation price despite fast-moving efforts to avoid getting closed out.
According to onchain data, one longtime Maker user — who began taking loans on the platform using this particular address back in 2021 — was minutes away from potentially incurring a $16 million penalty on his $75 million loan had he not intervened with a 2,000 ETH backstop mere minutes before his liquidation.
"First big liquidation now seems all but guaranteed to incur a $16.5M penalty," The DeFi Dan wrote on X at about 2:10 p.m. ET. "This account hasn't woken up since November, and has just 60mins to avoid liquidation."
Nearly all markets are retracing ground amid a worsening macro backdrop. Analysts are bracing for a potential correction across equities and risk assets following President Trump’s announcement that tariffs are here to stay. Crypto in particular has been hit hard following the lukewarm reception of the inaugural White House crypto summit on Friday. Bitcoin has pulled back below $80,000 and ETH below $2,000 for the first time in months.
Before sending over $4 million in additional ETH from Bitfinex, the whale’s liquidation price was around $1,932.08, with the window closing around 2:59 p.m. ET. He had an open loan of about $75 million worth of DAI backed by 65,675 worth of ETH at a 176% debt-to-collateral ratio.
The additional collateral gave him additional breathing room, lowering his liquidation price to $1,874.98 and bumping his loan ratio to 181.95%. ETH is currently trading at around $2,006.90, according to The Block’s ETH price data.
While the trader narrowly avoided liquidation, the risk is still live. ETH has been volatile and can easily go lower. He could continue to add ETH to his collateral position to further lower the liquidation price, but the only way to ensure he isn’t wiped out by a particularly long red candle is by paying off his debt.
"The liquidation price of the vault is at 1874.98 so they are safe. If the price of ETH continues to decline below $1874.98, the Oracle will catch it, and then after a 1 hour delay they will get liquidated," Niklas Kunkel, founder of Chronicle Labs, which created the oracle Maker uses, told The Block. "Next price that is queued up is $1850.36 which will finalize at the top of the next hour (20:00 CET). This will liquidate that vault UNLESS they pay down some of their debt or add more collateral."
Maker applies a liquidation penalty to vaults that become undercollateralized and are liquidated. The fee is added to the outstanding debt and represents a user's minimum loss.
Maker is a decentralized lending platform that allows users to take out loans in its DAI stablecoin by putting up overcollateralized amounts of cryptocurrencies. Key parameters like the liquidity ratio, stability fee (a.k.a. interest rate) and liquidation penalty are determined by the specific vault being drawn from, which determines risk based on the quality of collateral asset. The ETH-C vault the whale is using, for instance, has a minimum collateralization ratio of 170%.
In the past 10 minutes (at time of writing), the user has withdrawn over $1.5 million worth of USDT, swapped it for DAI and paid down a portion of his loan. This lowered his liquidation price to $1,836.34.
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