Today someone opened a 17,919 WBTC position on Maker to borrow 278 million DAI.
🚨 Celsius Network has 17,919 $WBTC leveraged in Maker protocol. This position faces liquidation at $22,584/$BTC. $278 mil $DAI debt, making it the largest individual debt position on the protocol. pic.twitter.com/MNF0B3zbQv
— Dirty Bubble Media: 🌡⏰💣 (@MikeBurgersburg) June 13, 2022
278 million DAI borrowed on Maker: 17,919 WBTC as collateral
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The address that opened this position is suspected to be that of Celsius.
Maker issues the stablecoin DAI using overcollateralized loans. In fact, to borrow 278 million DAI, equivalent to $278 million, it was necessary to lock up 17,919 WBTC, or over $420 million.
WBTC is the main token representing BTC, or Bitcoin, on the Ethereum blockchain. For every WBTC issued, there is one BTC locked in the protocol that manages WBTC.
Thus, with almost 18,000 Bitcoin this address managed to borrow 278 million dollars, with a value ratio of 1:1.6, i.e. slightly more than the DAI protocol.
The problem is that should the price of BTC fall below $22,584, that position would be liquidated. In other words, the 17,919 WBTC would be cashed out and sold by Maker, thus ceasing to be owned by the person who opened the position.
It is not clear whether it was really Celsius that opened that position. If so, it would be a big problem if it were liquidated.
Celsius revealed today that it had liquidity problems, so much so that it was forced to temporarily suspend withdrawals.
So far, there are no reports that they have been rehabilitated again, so the problem is still ongoing.
However, there is a possibility that the association of that address with Celsius is incorrect, so even in the event of liquidation, there may be no consequences for the company. If, on the other hand, that address turns out to actually be theirs, the company could have big problems in the event of liquidation of the position.
The current situation of the Celsius platform and the liquidity risk linked to the heavy market crash
Today, the price of the CEL token fell a lot, but over the course of the hours, it recovered slightly. This seems to mean that the market does not believe much in the hypothesis that Celsius is behind that critical position, or that it does not believe that the price of BTC will fall below $22,584.
DAI, for example, suffered no problems today, with its market value almost fixed at $1, as it should be. MKR, Maker’s governance token, lost 16%. However, it remains perfectly in line with ETH’s loss (-15%).
The low touched by BTC so far today is just over $23,500, so not that far from $22,584.
For now, Bitcoin has lost 13% compared to 24 hours ago, but it is not excluded that it could fall further.
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