ETH Reaches Two-Month Low Resulting in Liquidation Risks for On-Chain Positions
On March 10, it was reported that after ETH plummeted to a two-month low of $1373, several on-chain positions faced the risk of liquidation. According to DeFiLl
On March 10, it was reported that after ETH plummeted to a two-month low of $1373, several on-chain positions faced the risk of liquidation. According to DeFiLlama’s data, the $9.2 million position on MakerDAO will be cleared at $1367, while the $29.6 million position on Compound will be cleared at $1241 through the smart contract of the agreement.
ETH fell to a two-month low, and positions on MakerDAO and Compound faced liquidation risk
Analysis based on this information:
On March 10, the crypto market witnessed a sharp drop in the price of ETH, which plummeted to a two-month low of $1373. This price drop triggered a risk of liquidation for several on-chain positions. According to DeFiLlama’s data, two major on-chain positions on MakerDAO and Compound faced the risk of liquidation.
MakerDAO has a $9.2 million position that will be cleared at $1367, and the $29.6 million position on Compound will be cleared at $1241 through the smart contract agreement. This means that if the price of ETH continues to drop below these levels, these positions will face liquidation.
This news has raised concerns among investors as it highlights the risks associated with investing in crypto assets. The volatility of the market means that prices can change drastically over a short period, resulting in significant losses for investors. Additionally, on-chain positions, which are leveraged positions, can lead to higher risks, as they require investors to borrow funds to take a larger position. If the price of the asset drops, it can lead to a situation where the investor cannot repay the borrowed funds, leading to liquidation.
The data from DeFiLlama’s highlights the critical role that on-chain positions play in the crypto market. These positions play a significant role in the decentralized finance (DeFi) ecosystem, which is an emerging trend in the crypto market. Decentralized finance involves using blockchain technology to provide traditional financial services, such as borrowing and lending, without the need for intermediaries like banks.
In conclusion, the recent drop in the price of ETH has highlighted the risks associated with investing in crypto assets, particularly on-chain positions in the decentralized finance ecosystem. The news of liquidation risks serves as a cautionary reminder for investors to carefully consider the risks and perform due diligence before entering any position in the market.
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