Cryptocurrency News

DeFiFi to be hit by tsunami of liquidation in May


The massive sell-off in mid-May fueled volatility in the markets and triggered liquidations among several decentralized finance protocols. Like the earthquake, the market crash triggered the largest wave of liquidations in DeFi history. The market experienced a higher volume of liquidations on May 19 than in the previous two years in the DeFi space.

As part of the Market Insights bi-weekly newsletter, Cointelegraph Consulting collaborated with Covenant to investigate liquidations on Ava, Compound and Maker. While all the three DeFi protocols locked down account for about 50% of the total value, accordingly As for DappRadar, they saw a recent liquidation breaking a record of over $1.17 billion worth of collateral.

The biggest single day of liquidation ever was May 19 as the three protocols together saw $377 million worth of collateral liquidated. Av’s account stands at $170 million, while Compound isn’t far behind with $147 million worth of liquidations, and Maker is responsible for $60 million worth of liquidations.

The data shows that the dynamics of recent liquidations bear a striking resemblance to tsunami waves, the second of them occurring on 23 May when Ether (ETH) the price declined from its all-time high of $4,332 to $1,925. The day marks a liquidation of over $160 million, with the compound outpacing Aave by value.

Liquidation on the compound also set a new record. Previously, the protocol faced a liquidation of over $88 million in November as a result of the sudden price surge of the Dai stablecoin.