In February, the Ethereum lending market experienced the largest liquidation event in 12 months, with a liquidation amount of nearly US$500 million

Odaily News In February, the Ethereum lending market experienced its worst liquidation event in 12 months, with nearly $500 million in collateral liquidated. This is the second-highest monthly liquidation amount in DeFi history, second only to the liquidation amount during the market crash in May 2021, when liquidations reached $670 billion. As expected, the surge in liquidations occurred in tandem with the decline in the entire market, causing a sharp drop in the total market value of cryptocurrencies and triggering a large number of forced liquidations.
Most of these liquidations occurred on the two largest lending platforms, Aave and Compound, which handled the majority of liquidation volume in February. The platforms’ liquidation mechanisms allow third-party liquidators to repay a portion of insolvent loans and obtain the borrower’s collateral at a discount, typically between 5% and 15%, depending on the asset, providing an efficient adjustment incentive for the market.