ETH Whale Faces Massive Collateral Liquidation Risk on Compound

ETH Whale Faces Massive Collateral Liquidation Risk on Compound

Anonymous ETH Whale Faces Massive Collateral Liquidation Risk on Compound On-chain data analytics provider Lookonchain detected that an anonymous whale address that borrowed $31.4 million worth of stablecoins against 12,734 ETH ($40 million) as collateral on the decentralized lending protocol Compound is facing a risk of collateral liquidation. The loan health factor of the address is a precarious 1.06. If the price of ETH falls to $2,984, the collateral assets will be liquidated. The whale's collateral position is currently underwater, as the value of the borrowed stablecoins exceeds the value of the ETH collateral. This means that if the price of ETH continues to fall, the whale could lose a significant portion of their collateral. The liquidation risk is a reminder of the risks associated with borrowing against volatile assets like cryptocurrencies. When the price of the collateral asset falls, the loan health factor can deteriorate quickly, leading to a liquidation event. Borrowers should carefully consider the risks involved before taking out a loan against cryptocurrency collateral. It is important to have a clear understanding of the liquidation process and to be prepared for the possibility of losing collateral if the price of the asset falls.