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Ether (ETH) Drops to Two-Month Low, Posing Risks for On-Chain Positions

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On March 10, it was reported that after ETH plummeted to a two-month low of $1373, several on-chain positions faced the risk of liquidation. According to DeFiL…

Ether (ETH) Drops to Two-Month Low, Posing Risks for On-Chain Positions

On March 10, it was reported that after ETH plummeted to a two-month low of $1373, several on-chain positions faced the risk of liquidation. According to DeFiLlama’s data, the $9.2 million position on MakerDAO will be cleared at $1367, while the $29.6 million position on Compound will be cleared at $1241 through the smart contract of the agreement.

ETH fell to a two-month low, and positions on MakerDAO and Compound faced liquidation risk

Analysis based on this information:


Ether (ETH) plummeted to a two-month low of $1373 on March 10, sending shockwaves across the cryptocurrency market. As a result, DeFiLlama’s data revealed that several on-chain positions faced the risk of liquidation. Among these are the $9.2 million position on MakerDAO and the $29.6 million position on Compound. These positions will be cleared at $1367 and $1241, respectively, through the smart contract of the agreement.

This news highlights the high volatility of cryptocurrencies such as ETH, which can result in significant losses for investors who hold positions in these assets. Liquidation occurs when the value of an asset drops to a level where the collateral is not enough to cover the loan value, forcing the borrower to sell off their assets to cover their debt.

MakerDAO and Compound are two decentralized finance (DeFi) platforms that enable users to borrow and lend cryptocurrencies. MakerDAO issues Dai, a stablecoin pegged to the US dollar, which is collateralized by ETH. If the price of ETH drops below a certain level, borrowers must either add more ETH as collateral or pay off their debt to avoid liquidation.

Compound, on the other hand, allows users to earn interest on their digital assets by lending them to other users. Lenders can choose which cryptocurrency to lend and earn interest on their loan amount. However, if the value of the assets that they lent drops below a certain level, the smart contract will automatically liquidate the position to avoid losses.

The market volatility of cryptocurrencies such as ETH underscores the need for caution when investing in these assets. The highly speculative nature of the crypto market is not suitable for all investors, and those who do choose to invest in cryptocurrencies should only do so with a clear understanding of the risks involved.

In conclusion, the recent drop in the value of ETH to a two-month low has sent shockwaves throughout the cryptocurrency market. DeFi platforms such as MakerDAO and Compound are not immune to the risks associated with market volatility and investors should remain cautious when investing in these assets.

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