Ethereum whales on MakerDAO face liquidation risks as ETH nears critical levels

Two Ethereum whales on MakerDAO are on the verge of being liquidated if the digital asset drops below $1,800. The whales borrowed millions in DAI from the DeFi lending protocol and pledged Eth as collaterals are now under pressure due to the asset’s continued decline.

According to Arkham Intelligence and Lookonchain, the whales have about 125,603 ETH worth $238 million on the line. One of the whales borrowed $75 million worth of DAI from the platform, submitting Ethereum worth $110 million to be used as collateral. The whale has their liquidation threshold around $1,793, which means that a sharp drop in the price of the asset could trigger liquidation. Arkham also mentioned that the whale has been inactive for a while, justifying the concerns in the market.

Meanwhile, the other whale borrowed over 68 million DAI on the platform, submitting $122 million worth of Ethereum as collateral. Their liquidation is at $1,787. The whale had initially avoided liquidation on March 11 by paying off part of the debt. However, the current drop in the price of Ethereum has put their positions at risk, with many in the market observing what will happen next.

Ethereum struggles are set to continue as the DeFi sector feels its impact

The struggles of these whales highlight the impact of the drop in the price of Ethereum on the DeFi sector. With Ethereum used as the major token for transactions, the decline has been heavy on the sector. The token has been struggling since reaching a peak of $4,000 in December. While most tokens started the year with signs of greens, the token showed signs of future challenges. The struggles have now reached a new level in the past week, with the asset crashing under $2,000, posting a drop of 45% year-to-date.

The performance has also caused the TVL of most defi platforms to drop drastically, with Ethereum DeFi TVL falling to $50 billion from the $60 billion at the start of the year, according to DefiLlama. Out of the top 10 protocols on the network, only Aave and Sky have seen their TVL increase in the past month. All other protocols, including Lido, Uniswap, and Eigenlayer have registered a varying degree in TVL falls.

Meanwhile, the struggle does not only concern Ethereum as other tokens are also feeling the squeeze. Most of them have struggled due to rising US inflation data and President Trump’s tariffs, worsening the country’s economic outlook. However, the extent of its fall compared to other assets is an outlier, and the long-term expectations are not much better. According to analysts, most tokens could face problems ahead, with developers leaving the sector.

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