DeFi Faces Turmoil as Ether Crashes Under $1.9K, Putting $130M in ETH Loans in Jeopardy

Ethereum’s Drop Below $1.9K Puts DeFi Loans at Risk, Triggering Liquidation Concerns

Ethereum (ETH) plunged nearly 10% on Monday, slipping to $1,820 and bringing a major decentralized finance (DeFi) loan on the lending platform Sky (formerly Maker) dangerously close to liquidation.

The borrower had taken out a $74 million DAI stablecoin loan, backed by 65,680 ETH—valued at approximately $130 million earlier in the day. However, as ETH’s price fell below the loan’s liquidation level of just over $1,900, the risk of forced liquidation escalated.

To mitigate the threat, blockchain data from Debank shows the borrower withdrew 2,000 ETH (worth around $4 million) from Bitfinex and deposited it into the Maker vault to strengthen their collateral. As ETH continued its decline, they later withdrew $1.6 million in USDT from Binance, swapped it for DAI, and used it to pay down part of the loan, reducing the outstanding balance to $73.1 million.

Despite these defensive moves, the loan remains vulnerable, with its liquidation threshold now at $1,836—dangerously close as ETH hovers around $1,870.

DeFi Liquidation Wave Looms as ETH Struggles

This isn’t the only DeFi loan in danger. Data from DefiLlama reveals that approximately $13.6 million in loans could be liquidated if ETH reaches $1,857, while another $117 million is at risk if ETH drops to $1,780. If the downtrend continues and ETH falls another 20%, as much as $366 million in DeFi debt could face liquidation.

Mass liquidations in DeFi could add to selling pressure, as platforms automatically sell off collateral from liquidated positions, potentially accelerating Ethereum’s decline. With ETH trading near key levels, market participants are closely watching whether a deeper sell-off is imminent.

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