One of the best parts of DeFi is its transparency, and recent events in the lending market have made this very clear. Everyone in the market can see who is borrowing what, how much, and perhaps most importantly, at what price level they are facing liquidation.
Compare this to Three Arrows Capital’s various deals it made with partners, some of which were reportedly done without collateral and based solely on the good word of the 3AC crew. (Oops.)
During the current crypto crash, it was also interesting to see how the liquidation mechanism operates automatically within DeFi. There were no backdoor deals to save positions, and all rules, such as loans, were completely transparent.
Let’s say you want to borrow Wrapped Bitcoin (WBTC) on Aave. Whether you are the world’s largest hedge fund or a college student from Mumbai, you must be fully aware of the 80% liquidation threshold. rules are rules.
With this in mind, you can also equip yourself with ways to measure the health of large lenders. We can identify wallets for these platforms and watch as they move towards liquidation (or add more collateral to avoid the worst).
This week, we saw for the first time how Celsius is slowly but surely topping many of its DeFi positions.
After collecting various crypto wallets belonging to the lender (11 have been identified on Etherscan), we then created an appboard of activity at all these addresses. Appboard is a handy visualizer for a crypto wallet – instead of just using Etherscan and following strings of letters and numbers, the platform shows a bit more clearly how the wallets are working.
It looks something like this:
This tool is also handy because we can see which tokens they hold in large quantities (think Lido’s Stacked Ethereum and Wrapped Bitcoin were Celsius’s favourites), the protocols these wallets are mainly using ( Away and Compound rank higher), and how much debt these wallets hold.
First, we can see that the net worth of this collection of wallets is over $1.3 billion. We can also see that he has a debt of over $258 million.
A quick scroll at the bottom of the dashboard indicates that this loan lending is split between Compound and Av in DAI and USDC.
Let’s dive into that ave and compound activity. After all, a little over 50% of all these wallet’s tokens are held between these two protocols. And, more importantly, digging into it is relevant to a company whose withdrawals have been stalled for a little more than three weeks.
The cumulative crypto transaction history tab for this wallet indicates that one of Celsius’ wallets this week paid nearly $50 million in debt to Compound in three transactions: here, here and here. On July 3, it appears that Celsius has paid off another $50 million USDC loan to Aave.
That’s a little over $100 million in loan repayments this week. Clearly, Celsius is scrambling to get its books in order. But whether it will come out on top or just the inevitable delay remains to be seen.
And while the above wallet analysis may be compelling for Celsius users, a recent report suggested that Sam Bankman-Fried looked at the company’s books and decided it went beyond savings. Obviously, we’re not seeing the full picture from just looking at the wallet data on the appboard.
Walk carefully guys. There is a strong possibility that this summer’s bear market is just getting started.
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