Sky has been hit with a staggering liquidation of over $100 million in Ether (ETH) after a sharp market downturn triggered by fresh U.S. trade tensions.
On April 6, the price of ETH plummeted by approximately 14%, dragging it down to $1,487 and triggering the forced liquidation of a colossal collateralized debt position. According to on-chain data trackers DeFi Explore and Lookonchain, the liquidation involved 67,570 ETH—equivalent to roughly $106 million—on the Sky platform, formerly as Maker, before its August rebranding.
The decentralized lending protocol utilizes an overcollateralized lending model where users can borrow DAI by locking up ETH as collateral. Borrowers must maintain a minimum collateralization ratio of 150%, ensuring that for every DAI borrowed, $150 in ETH backs it. If the collateral value drops below this ratio, the position risks liquidation. A whale’s position recently fell to a 144% ratio due to a price drop, triggering the liquidation process. In such cases, the ETH collateral is sold to settle the DAI loan and any fees, with any excess ETH returned to the user.
The situation may not be isolated. On-chain analytics platform Spot On Chain warned that another large holder, who had deposited nearly 57,000 wrapped ETH—valued at $91 million—was teetering on the edge of liquidation.
The broader market downturn follows a steep correction sparked by U.S. President Donald Trump’s latest tariff announcements, which have spooked global investors. ETH has shed 14.5% in just 24 hours, now trading near October 2023 levels when the crypto market was still reeling from the FTX collapse, according to data from CoinGecko.
CoinGlass reports that Over 320,000 traders were liquidated in the past day, resulting in nearly $1 billion in losses, primarily affecting Ethereum (ETH). The cryptocurrency is down 68% from its all-time high in 2021, and more DeFi borrowers may face liquidation unless they increase their collateral quickly.
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