Loan backed by 2.3% of AAVE supply hit by cascading liquidations as token slides
A major loan collateralized by 2.3% of AAVE supply is undergoing cascading liquidations due to a sharp 15% drop in the AAVE token price.Summary
A significant loan on the Aave decentralized lending protocol, backed by approximately 2.3% of the total AAVE supply (355,093 AAVE tokens), is facing cascading liquidations as the AAVE token price dropped sharply by 15% to around $104.
Roughly $2 million worth of AAVE collateral has been seized across four liquidation transactions to cover nearly $2 million in USDC debt. Liquidations occur when a position's Health Factor drops below 1, allowing liquidators to repay part of the debt in exchange for collateral at a discount, incurring a penalty for the borrower.
While the borrower initially deposited $8.73 million in AAVE in 2024, the loan has been managed through multiple draws and repayments. Speculation arose that Aave founder Stani Kulechov might be the borrower following his recent large real estate purchase, but Kulechov denied this, stating, "I stake my Aave."
(Source：The Block)