On-chain metrics indicate that the ongoing decline in Ethereum’s price has brought hundreds of millions in leveraged DeFi positions to the brink of liquidation.
Recent figures from a DeFi analytics platform reveal that approximately $319.8 million in Ethereum-backed loans are now just 20% away from their liquidation point.
Many of these vulnerable positions are found in leading DeFi lending services, especially MakerDAO and Compound.
The analysis suggests that if Ethereum falls below $1,800 and nears the $1,750 mark, nearly $246 million in collateral could face liquidation.
MakerDAO, in particular, represents about $229 million of this total, while users of Compound could be at risk of losing around $17 million.
As per current data, ETH was trading at $1,872 at the time of writing
A decline of 19% from this price could push the asset into a precarious situation, potentially resulting in a cascade of liquidations. Such an outcome would not only affect borrowers but could also reverberate throughout the wider DeFi landscape.
A liquidation cascade occurs when falling prices compel mass liquidations, which can further drive down prices and lead to even more liquidations. This sequence can cause rapid sell-offs and contribute to greater market instability.