The volume of outstanding high-risk loans at DeFi has surpassed $5 million, recovering after Curve founder Mikhail Egorov threatened to completely liquidate Curve founder Mikhail Egorov's position for more than $100 million.
The last time such high values were seen was in July 2022.
The Benqi platform alone has issued more than $115 million in loans, of which $5 million are classified as “high risk.”
The catalyst was a rally in the #cryptocurrencymarket on the back of the US election-induced optimism.
High-risk loans are loans that are backed by volatile assets that are within 5% of the liquidation threshold. Traders use them to capitalize on potential price fluctuations.
Evaa Protocol co-founder Alexander Sudeikin spoke to Cointelegraph and said that the mass liquidation of high-risk loans has the potential to impact the broader cryptocurrency market.
"However, I don't think the impact of a worst-case scenario could be that significant. DeFi has matured a lot in recent years, especially among large protocols that have implemented better risk management practices. Increased resilience can mitigate the effects of any sharp downturns, “ the expert elaborated.
Sudeikin cited the example of the protocol he developed, which introduced restrictions on the maximum amount of assets, created isolated pools and a number of other measures.
Recall, in November Coinbase launched “wrapped” #bitcoin☀️ in the Solana network - cbBTC.
In September, the exchange introduced its own version of digital gold in the form of a token of the ERC-20 standard.
