This Trader Is On The Brink Of Losing Money, Will Selling WBTC On Aave V2 Help?
13 Outubro 2023 - 7:00PM
NEWSBTC
A trader on Aave, a decentralized liquidity protocol operating on
multiple platforms, including Ethereum and OP Mainnet,
has begun selling wrapped Bitcoin (WBTC) to repay
outstanding debt, records on October 13 reveal. WBTC is a tokenized
version of Bitcoin issued on Ethereum that allows holders to engage
in decentralized finance (DeFi) activities. Trader Selling WBTC To
Repay Debt On Aave v2 According to Lookonchain data, the
unidentified trader marked with address “0x47ab” borrowed roughly
$8 million worth of multiple stablecoins, including USDC, USDT, and
DAI, Maker’s stablecoin, on Aave v2 after depositing various
assets, including WBTC, Maker (MKR), and Ethereum (ETH) worth
approximately $11 million. Related Reading: Failed Bullish Pattern
Could Send Ethereum Sub-$1000 When writing, the health factor of
borrowed assets stands at 1.09, teetering close to liquidation.
According to Aave’s documents, the health factor is a metric
that compares the safety of collateral and borrowed loans to the
underlying value. Technically, the higher it is, the safer the
funds are from liquidation. If the health factor exceeds $1,
deposited collateral will be liquidated to borrow outstanding
loans. Aave is a popular decentralized finance (DeFi)
protocol where token holders can choose to supply liquidity and
earn passive income. At the same time, users can deposit collateral
and borrow overcollateralized loans, which they can repay at any
time, provided the health factor is around 1. Since loans are
overcollateralized, the collateral is usually higher than the
borrowed amount. Volatile Bitcoin Prices To Blame? As it is, the
trader, Lookonchain shows, has started selling WBTC to repay
outstanding debt. A big chunk of what the trader supplied is in
WBTC, standing at 366.56 WBTC, worth roughly $9.1 million at spot
rates. However, considering market prices have fluctuated
recently, the contraction has impacted the health factor,
increasing the risk of collateral liquidation. To counter this, the
trader sold 3 WBTC for roughly $80,000. The address still
owes Aave V2 approximately $8.08 million, mostly in USDT, at around
$5 million. There are $3 million of USDC and around $368,000 of
DAI. It is unclear whether the trader will seek to borrow more,
especially if Bitcoin prices increase. Related Reading: Have
Traders Moved Past Dogecoin? Transactions Plunge 98% Since June The
address remains long on MKR, the governance token of the MakerDAO
protocol; Uniswap’s UNI; Chainlink’s LINK; and Ethereum. Besides
WBTC, the trader’s second-largest holding is in ETH, while the
smallest is MKR. Ironically, MKR has been one of the top-performing
assets, rallying by over 160% in H2 2023 alone. The token peaked at
$1,600 in early October before cooling off to spot rates. Feature
image from Canva, chart from TradingView
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