Ether's Freefall Below $1.9K Roils DeFi, Jeopardizes Crypto Loan Backed by $130M in ETH
### Pummeting ETH Prices Threaten DeFi Loans with Massive Liquidations
**By Krisztian Sandor | Edited by Stephen Alpher**
**Updated Mar 10, 2025, 7:58 p.m. UTC | Published Mar 10, 2025, 7:35 p.m. UTC**
Ethereum’s ETH experienced a sharp decline on Monday, falling nearly 10% and sending shockwaves through decentralized finance (DeFi) markets, where the token serves as a critical collateral asset. The downturn has placed several large DeFi loans at risk of liquidation, potentially triggering a cascading effect that could drive ETH prices even lower.
### **Key Developments:**
- A major DeFi loan on Sky (formerly Maker) backed by $130 million worth of ETH is in imminent danger of liquidation.
- The borrower, who initially pledged 65,680 ETH to secure a $74 million DAI stablecoin loan, deposited an additional 2,000 ETH in a desperate bid to maintain collateral requirements.
- Despite these efforts, the loan’s liquidation threshold remains dangerously close, set at $1,836 ETH, while the token recently traded at around $1,870.
### **Mounting Liquidation Risks**
Data from DeFi analytics platform DefiLlama shows that approximately $336 million worth of assets across various DeFi protocols are within a 20% price drop of liquidation. This includes:
- **$13.6 million** in loans at risk if ETH falls to **$1,857**
- **$117 million** in loans facing liquidation at **$1,780**
- A total of **$366 million in debt** that could be liquidated if ETH drops another 20%
The borrower in question withdrew 2,000 ETH (worth nearly $4 million) from the Bitfinex exchange earlier Monday and deposited it into a Maker vault to shore up the loan’s collateral. As ETH prices continued to fall, the borrower also converted **$1.6 million of USDT** into DAI and deposited it to reduce outstanding debt to $73.1 million.
### **Why It Matters**
DeFi liquidations can amplify downward pressure on an asset's price. When a loan is liquidated, the protocol automatically sells or auctions off the collateral—leading to increased selling pressure on ETH. If ETH prices continue to decline, a wave of forced liquidations could further destabilize the market.
Ethereum’s market slump comes amid broader crypto weakness, making it even more challenging for large borrowers to maintain their positions. With ETH already nearing multiple liquidation levels, traders and investors are closely watching for further volatility in the days ahead.