• Ethereum whales face a $238 million liquidation risk as ETH price declines, exacerbating DeFi vulnerabilities.
  
• The whale holding 60,810 ETH risks liquidation at $1,793, while the second whale’s threshold is $1,787.
  
• March 31 liquidation event caused WETH price drop, market volatility, and de-pegging of stablecoins.
  

Ethereum’s ongoing struggles are intensifying risks for DeFi investors, particularly those who have borrowed against their ETH holdings. With Ethereum’s price declining, two major whales are at risk of liquidation, potentially losing up to $238 million. The scenario underscores DeFi’s vulnerability to fluctuating market conditions, heightening concerns about the security of decentralized lending.

Two Ethereum whales borrowed significantly large amounts of DAI from MakerDAO by using ETH as collateral. They collectively hold 125,603 ETH, which is worth around $238 million. As the price of Ethereum is currently weakening, both of them are getting closer to their liquidation amounts, increasing concerns that forced liquidation could happen and lead to further market disruption.

The first whale has taken out over $75 million in DAI, leaving 60,810 ETH as security, and the value of ETH is $110 million. When the liquidation margin is $1,793, all of their assets will go on the market if the price of ETH gets lower than this level. Adding to the concern, this whale has remained inactive for three weeks, making it unlikely that they will take action to mitigate their risk.

The second whale has borrowed over $68 million in DAI, securing 64,792.7 ETH worth $122 million as collateral. Their liquidation price is a slightly lower and stands at $1,787. Finally, they did not suffer liquidation at the end of March after the partial debt repayment was made, however, a decrease in the price of ETH has put them in a difficult position again.

On March 31, 2025, a major liquidation event occurred involving an address (0x0fb5…7319) that had supplied 1.55K WETH and borrowed $1.5M USDT and 267.4K DAI. When WETH’s price dropped to $1,767, 621.06 WETH worth $1.13M was liquidated. This event highlights the risks associated with leveraged positions in volatile markets.

The liquidation had immediate consequences, affecting WETH, USDT, and DAI market dynamics. The sharp price decline breached the collateral threshold, forcing the protocol to liquidate the position. The event increased selling pressure on WETH, pushing its price down to $1,750. It also caused temporary de-pegging in stablecoins, with USDT dropping to $0.998 and DAI to $0.997.

The liquidation triggered a 1.5% drop in WETH’s price within 15 minutes, along with a 20% surge in WETH/USDT trading volume. Market panic ensued, increasing volatility across trading pairs. Funding rates for WETH perpetual futures rose from 0.01% to 0.03%, indicating a shift toward bearish sentiment. These fluctuations demonstrate the cascading effects of large liquidations in crypto markets.

From a technical perspective, the event disrupted WETH’s bullish trend, breaking support at $1,750 and triggering stop-loss orders. The RSI dropped from 60 to 45, signaling weakened momentum. On-chain data showed a 25% surge in trading volume, with transaction sizes increasing by 10%, reflecting heightened market activity and reassessed risk exposure.

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