One of the best parts of DeFi is its transparency, and recent lending market events have made it clear enough. Everyone in the market knows who is renting what, how much they are renting, and perhaps most importantly, the price level they are facing for liquidation.
Compare this with the various transactions Three Arrows Capital has made with its partners. Some are reported to have been done based solely on the good words of the 3AC crew, without collateral. (Oops.)
It was also interesting to see how the clearing mechanism within DeFi works automatically during the current cryptocurrency crash. There was no backdoor deal to save the position and all the rules like the loans made were completely transparent.
Suppose you want to borrow Bitcoin (WBTC) wrapped in Aave. Whether you are the world’s largest hedge fund or a college student in Mumbai, you need to be keenly aware of the 80% clearing standard. The rule is the rule.
With this in mind, you can also learn how to measure the health of large lenders. You can identify wallets for these platforms and monitor them sneaking up towards clearing (or add collateral to avoid the worst).
This week, I’ve seen first-hand how Celsius slowly but surely surpassed several DeFi positions.
After collecting various crypto wallets belonging to the lender (11 are identified by Etherscan), we created an ApeBoard of activity across all these addresses. ApeBoard is a convenient visualizer for cryptocurrency wallets. In addition to using Etherscan to track strings of letters and numbers, the platform makes the wallet work a little more clearly.
It looks like this:
This tool has a large holdings of tokens (Lido’s Staked Ethereum and Wrapped Bitcoin seem to have been Celsius’ favorites), the protocols that these wallets primarily use (Aave and Compound are top), and how much. It is convenient because you can check if you have any debt. Included in these wallets.
First, we can see that the collection of this wallet has a net worth of over $ 1.3 billion. You can also see that we have more than $ 258 million in debt.
If you scroll down the dashboard quickly, you’ll see that this debt is split into borrowed DAI and USDC Compounds and Aaves.
Dive into that Aave and Compound activity. After all, over 50% of the tokens in these wallets are held between these two protocols. And, more importantly, digging into this is related to companies whose withdrawals have been suspended for just over three weeks.
The Cumulative Cryptographic Transaction History tab in this wallet shows that one of this week’s Celsius wallets has repaid approximately $ 50 million in loans to Compound in three transactions here, here, and here. On July 3, Celsius apparently repaid an additional $ 50 million USDC loan to Aave.
This is over $ 100 million in debt repayments this week. Obviously, Celsius is scrambling to organize the books. But it’s still unclear if it will come up or just be delayed.
The wallet analysis above may be appealing to Celsius users, but recent reports suggest that Sam Bankman-Fried looked at the company’s books and decided that the savings were exceeded. Obviously, just looking at the ApeBoard wallet data doesn’t give you the big picture.
Everyone, step carefully. The bear market this summer is likely to be just the beginning.
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