$100M ETH Whale Nearing Liquidation

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An Ethereum whale address, 0x6bB, is on the verge of liquidation, as the market continues to bleed lower. The address was leveraged on $110M worth of wrapped ETH (WETH) or 60,810 WETH, with their liquidation price at $1,793. The address had not been active since three weeks ago in early March, leading many on-chain traders to expect an incoming large liquidation event for ETH.

Liquidation in decentralized lending protocols like MakerDAO is a programmatic process. Unlike traditional finance, where margin calls might involve a negotiation or grace period, smart contracts are designed to automatically sell the collateral—in this case, the whale's ETH—once it hits the specific liquidation price. This mechanism ensures the protocol remains solvent but creates a rigid "do or die" price level for borrowers, which can contribute to selling pressure in the broader market if the position is large enough.

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However, not long after a move from ETH down to just a few dollars off their liquidation price, the address’s owner began selling off altcoins such as Polygon (POL), Alchemix (ALCX) and Uniswap (UNI) for DAI. The proceeds of these altcoin sales worth approximately $981K have been used to repay a small portion of their DAI debt on Maker, which has lowered the position’s liquidation price to $1,781.99.

The decision to divest from other ecosystem tokens underscores the urgency of the situation. By sacrificing these smaller positions to generate immediate DAI liquidity, the whale is effectively deleveraging to prioritize the survival of their core Ethereum holding. This behavior is typical of high-net-worth on-chain entities attempting to defend a primary position against short-term volatility, known as "collateral defense," to avoid the catastrophic loss of the entire principal asset.

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