According to blockchain insider Colin Wu, the Ethereum lending market is in jeopardy as its price has plummeted.
Kwon denied accusations of embezzling $2.7 billion
The problem is in the number of liquidations that will appear in the market if ETH falls below or below $1,150. Reportedly, more than $500 million in on-chain collateral will disappear. At wBTC, $300 million of on-chain collateral will evaporate as the price approaches $21,600.
The massive liquidation will trigger a further decline in the crypto market, driving a massive outflow of funds from decentralized applications (dApps). The sharp decline in the use of decentralized applications will reduce the network’s revenues.
Previously, several market and on-chain tracking services reported more than $700 million in liquidations. This ultimately turned out to be a flaw on the API side of the centralized exchange. But with more than $500 million in real liquidations, the pressure on the asset will increase dramatically.
Market bleeds after inflation figures
The main cause of the sell-off in the cryptocurrency market is the unexpected inflation data. The ongoing devaluation of the US dollar caused a rally in commodities such as gold, which appreciated more than 3% in 24 hours.
Risks mounted for Ethereum after the depegging of the stETH to ETH pair appeared, triggered by the massive sell-off and lack of liquidity. The sell-off was driven by the declining profitability of the ETH 2.0 strike contract, the reorganization of the test network and profit-taking from early investors.
Risky assets such as cryptocurrencies and technology stocks experienced massive outflows and falls in value. Bitcoin has lost more than 17% in value in 24 hours and Ethereum plunged almost 20%.
