The cryptocurrency market faced significant challenges that nearly led to the liquidation of a major investor. However, the investor managed to avoid this by quickly taking action through the Maker protocol.
Last-Minute Move by a Crypto Whale
On-chain data reveals that the investor acted just one hour before the liquidation process was set to begin. As ETH dropped below $2,000, the loan's collateral ratio fell to 176%. By adding 2,000 ETH and $1.5 million in DAI, it was brought back up to 180%. Yet, negative macroeconomic signals continue to pressure ETH, including Trump's tariff announcements and reactions to the White House's crypto summit.
Maker Protocol and Liquidation Process
MakerDAO’s liquidation mechanism allows users a one-hour window to intervene. If ETH's price falls below $1,781 according to hourly updated oracles, the position will be automatically liquidated. In such a scenario, a 13% penalty fee ($16.5 million) will be triggered, and the collateral will be auctioned off.
Cryptocurrency Market and Future Prospects
Despite the intervention opportunity, a prolonged downward trend in ETH could create a domino effect impacting the entire cryptocurrency market. High-risk products like Maker’s ETH-C vault operate with a minimum collateral ratio of 170%, suggesting that similar scenarios could occur during volatile periods.
While this investor managed to avoid a major loss, market pressures remain high, and such incidents could reoccur. Market participants must be ready to take swift action to protect their assets.
