Within the last 24 hours, Celsius repaid $120 million of its debt owed to decentralized lending protocol Maker across three transactions.
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Celsius, a centralized lending firm currently facing a severe liquidity crisis, had previously borrowed hundreds of millions on Maker using wrapped bitcoin (WBTC) as collateral.
By paying down its Maker debt, Celsius has de-risked its loan position from potential liquidation. In decentralized finance, liquidations occur when traders cannot repay their loans on time, and the protocols automatically sell their collateralized assets.
As the price of bitcoin dropped recently, Celsius faced a heightened risk of liquidation. The repayment has helped reduce the liquidation price on its WBTC collateral to less than $5,000, according to data from DeFiExplore.
On-chain data suggests that Celsius’ obligations are complex and it maintains collateralized loans on multiple lending protocols. The firm still owes $82 million to Maker, $100 million to Compound, and $175 million to Aave.
Celsius’ recent developments are notable given questions about the platform’s solvency and broader fears about solvency across the crypto industry — particularly centralized lenders _ amid a decline in major digital asset prices. Those concerns were kicked into overdrive when Celsius announced that it would halt withdrawals from its platform.
© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
Vishal Chawla is a reporter who has covered the ins and outs of the tech industry for more than half a decade. Prior to joining The Block, Vishal worked for media firms like Crypto Briefing, IDG ComputerWorld and CIO.com.
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