On Wednesday afternoon, it looked like Three Arrows Capital, which also goes by 3AC, was selling assets, which included $40 million worth of Lido Stacked Ethereum (stETH). Researchers and analysts on Twitter are saying this is to prevent $264 million of Aave loans and $35 million of compound loans from going into liquidation.
a crypto trader who goes moon overlord Blockchain data platform Nansen shared a screenshot on Twitter that showed wallets linked to Three Arrows Capital were involved in the five biggest transactions of the past week and exchanged at least 30,000 stETH.
People think celsius is the biggest stETH dumper but its 3AC and it’s not relatively close, they are dumping every account and seed round address they have, mostly it looks like it is going to pay off debts and outstanding loans Is. pic.twitter.com/9bZnmTXQzj
Another crypto analyst, onchain wizardIt is estimated that if the price of Ethereum reaches $1,042, the loan will be liquidated.
This wallet (tagged as 3AC on Nansen) is aggressively paying off the AAVE loan against its 223k ETH/$264mm position to avoid liquidation. With $198mm in lending against it, @ 85% liq threshold, ETH rises by -11% to $1,042https://t.co/y7yJJ0NlMc pic.twitter.com/2S55Rzl9Xc
“It’s not like 3AC is saying, ‘Hey, that’s definitely my address,'” explained Caleb Sheridan, co-founder of Eden Networks decrypt, “But everyone assumes it’s related to 3AC.”
Eden Network is a protocol used by merchants to guarantee the placement of their transactions in a particular block on the Ethereum network. This can be especially valuable for those trying to create an NFT before the supply runs out, place an arbitrage trade or, in this case, 3AC’s and treat it as compound collateral.
There’s never been a worse time to try to land stETH as the sharks surround two loans, waiting for them to go into automatic liquidation.
Lido Staking Ethereum, which allows people to stake Ethereum and receive the same amount of STET in return, is trading at a 6% discount. At the time of writing, 1 stETH through 0.94 ETH can be traded curve finance,
If the price of Ethereum drops significantly, the collateral used to secure the loan will be liquidated, or sold. And whoever manages to bid on the first collateral will get a 5% reward. Simply put, this means they will pay, for example, $100 million for $105 million worth of ETH.
If that happens, he said, it could be a Catch 22 for the person with the winning bid. They will need to swap ETH for a coin that is not seeing price volatility like USDC, and sooner, if they want to realize a return on trading.
“You got this massive effect,” Sheridan said, “where suddenly wherever you are liquidating ETH for USDC, you have to do it in a clever way or you risk holding this asset that could keep falling. is the price.”
If the collateral that secures those two loans gets liquidated, it’s bad for the lenders as well. And that includes Celsius, which is already grappling with the problem of sufficient liquidity.
After all as a Twitter user decadent As pointed out, 3AC is one of the largest borrowers and customers for crypto lenders. If 3AC goes down, it will send a shockwave to the rest of the market and make the current bearish even more hellish.
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