An Ethereum whale has suffered a significant blow, losing more than $106 million in a liquidation event on the decentralized finance (DeFi) lending platform Sky. This occurred as the price of Ether (ETH) plunged by 14% on April 6, triggering a wave of liquidations across DeFi platforms.

ETH Whale Faces Massive Loss on Sky Platform

The investor, who held a large position in Ether, was forced to liquidate 67,570 ETH — valued at approximately $106 million — after the price of the cryptocurrency dropped sharply. The liquidation occurred on the Sky lending protocol, which operates on the principle of overcollateralization. The platform, rebranded from Maker in August 2023, allows users to deposit crypto assets, such as ETH, to borrow stablecoins like DAI. However, due to ETH’s value plummeting, the borrower’s collateralization ratio fell below the required threshold, leading to the forced liquidation of their debt position.

Sky’s lending system operates with a minimum collateralization ratio of 150%, meaning that for every 100 DAI borrowed, at least $150 worth of ETH must be deposited. If the value of the ETH collateral drops below the required threshold, the position becomes eligible for liquidation, which is what happened when ETH’s value fell and the collateral ratio dropped to 144%.

More Liquidations on the Horizon

As ETH continues its downward trend, other large positions are facing liquidation. Another whale on the platform, who had supplied 56,995 wrapped ETH (worth approximately $91 million), was reportedly on the verge of liquidation as well. In such events, the Sky protocol seizes the collateralized ETH, which is then auctioned to pay off the borrowed DAI and any associated fees. If any collateral remains after covering the debt, it is returned to the borrower.

Ethereum’s Struggles Amid Market Bloodbath

ETH’s price has faced significant pressure, falling by over 14.5% in the past 24 hours, reaching as low as $1,547. This sharp drop comes as part of a broader crypto market downturn, fueled by a market sell-off in response to US President Donald Trump’s tariff policies. The last time ETH traded this low was in October 2023, when the crypto market was still deep in bear market territory following the collapse of the FTX exchange.

Ethereum is currently down 68% from its all-time high in 2021, and with the market’s uncertain conditions, further declines could lead to additional liquidations on DeFi platforms unless borrowers can provide more collateral to avoid their positions being seized.

Wider Market Impact and DeFi Vulnerabilities

The broader crypto market has been severely impacted by the sell-off, with Bitcoin and other major assets suffering significant losses. Over 320,000 traders have been liquidated in the past 24 hours, with almost $1 billion worth of positions wiped out. A substantial portion of these liquidations are related to ETH positions, reflecting the severe impact of the current market volatility on the altcoin space.

The growing number of liquidations has exposed vulnerabilities within DeFi platforms, as leveraged positions in a volatile market can lead to swift and harsh losses for investors unable to meet collateral requirements. As Ethereum and other assets remain at bear market lows, many investors are on edge, concerned that further downturns could trigger additional liquidations in the coming days.

Conclusion: DeFi and ETH Under Pressure

The recent Ethereum whale liquidation on Sky underscores the risks associated with leveraging in decentralized finance platforms, particularly during periods of heightened market volatility. As Ethereum’s price struggles to maintain its value amidst the broader market sell-off, it remains unclear how much further the downturn could extend. DeFi platforms will likely continue to see pressure unless ETH’s price stabilizes, and investors take extra caution in managing their collateralized positions.