This past week, the decentralized finance (DeFi) ecosystem faced the brunt of the bears fueled by liquidation rumors of Three Arrow Capital (3AC) and Celsius liquidations. MakerDAO decided to cut off Aave (AAVE) from its direct deposit module as a safeguard in light of the possibility that Celsius folds and crashes the price of staked Ether (stETH).
Trading firm 8 Blocks Capital called out to platforms holding funds owned by 3AC to freeze the assets as rumors of 3AC’s insolvency stay afloat. Micheal Saylor believes Bitcoin (BTC) and the Lightning Network can solve many of the DeFi ecosystem problems.
The top 100 DeFi tokens were hit hard by bears, with the majority of tokens registering multi-month low along with double-digit losses over the past week.
Crypto crash wreaking havoc on DeFi protocols, CEXs
A heavy cryptocurrency sell-off in the markets on Monday caused significant ripples for projects and entities alike. DeFi ending protocol Aave’s utilization rates have fallen across nearly all stablecoin borrowings. Most notably, borrowings for Binance USD (BUSD) now stand at a mere 30% compared to a high of 80% back in May.
The utilization rate is the ratio of borrowed to deposited funds. Since borrowers are required to post digital asset collateral before taking out a loan on Aave, users are likely withdrawing en mass in light of Monda’s sell-off to prevent liquidation. Data from DefiLlama indicates that Aave’s total value locked has fallen from $33.51 billion last October to $8.11 billion.
Su Zhu’s cryptic statement as rumors swirl of 3AC liquidations and insolvency
Su Zhu, the co-founder of Singapore-based crypto venture capital firm Three Arrows Capital (3AC), has put out a cryptic statement on Twitter in response to swirling rumors that the company is battling against insolvency.
Online chatter about 3AC being unable to meet a margin call began after 3AC started moving assets around this week to top up funds on decentralized finance platforms such as Aave to avoid potential liquidations amid the tanking price of Ether (ETH) this week. There are unconfirmed reports that 3AC faced liquidations totaling hundreds of millions from multiple positions.
Maker cuts off Aave’s DAI supply as fallout from Celsius continues
MakerDAO has voted to cut off lending platform Aave’s ability to generate Dai (DAI) for its lending pool without collateral as the risks of Celsius’s liquidity crisis loom large over the entire crypto…
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