Today someone opened a position of 17,919 WBTC on Maker to borrow $278 million of DAI and there is speculation that it may be Celsius Network.
🚨 Celsius Network has 17,919 $WBTC leveraged in Maker protocol. This position faces liquidation at $22,584/$BTC. $278 thousand $DAI debt, making it the largest individual debt position on the protocol. pic.twitter.com/MNF0B3zbQv— Dirty Bubble Media: 🌡⏰💣 (@MikeBurgersburg) June 13, 2022
$278 million in DAI borrowed: 17,919 WBTC as collateral
It is suspected that the address that opened this position is that of Celsius. Maker issues the DAI stablecoin using overcollateralized loans. In fact, to borrow 278 million DAI, equivalent to $278 million, it was necessary to tie up 17,919 WBTC, or more than $420 million. WBTC is the main token that represents BTC, or Bitcoin, on the Ethereum blockchain. For every WBTC issued, there is one BTC locked in the protocol that manages WBTC. Thus, with almost 18,000 Bitcoin, this address managed to borrow $278 million dollars, with a value ratio of 1:1.6, that is, a little more than the DAI protocol. The problem is that if the price of BTC falls below $22,584, that position would be liquidated. In other words, the 17,919 WBTC would be cashed out and sold by Maker, thereby ceasing to be owned by the person who opened the position. It is not clear if it really was Celsius Network which opened up that position. If so, it would be a big problem if it was liquidated. Celsius Network revealed today that it was cash-strapped, so much so that it was forced to temporarily suspend withdrawals. So far, there are no reports that they have been rehabilitated again, so the problem continues. However, there is a possibility that the association of that address with Celsius is incorrect, so even in case of liquidation, there may be no consequences for the company. If, on the other hand, that address turns out to be theirs, the company could have big problems in case of liquidation of the charge.
The current situation of the Celsius platform and the liquidity risk linked to the sharp market decline
Today the price of the CEL token fell a lot, but over the hours it recovered slightly. This seems to mean that the market does not believe much in the hypothesis that Celsius is behind that critical position, or that it does not believe that the price of BTC will drop below $22,584. DAI, for example, was untroubled today, with its market value almost fixed at $1, as it should be. MKR, the Maker Governance Token, lost 16%. However, it is perfectly in line with the loss of ETH (-15%). The low touched by BTC so far today is a little over $23,500, so it’s not too far from $22,584. For now, Bitcoin has lost 13% compared to 24 hours agobut it is not ruled out that it could fall even more.