Crypto whale faces imminent liquidation on Maker after sending ETH and DAI to backstop a $75 million loan

A crypto whale is narrowly avoiding a painful liquidation on Maker on Monday amid choppy crypto markets. Though he’s not out of the woods yet — as ETH continues to inch closer to his liquidation price despite fast-moving efforts to avoid getting closed out.

According to onchain data , one longtime Maker user — who began taking loans on the platform using this particular address back in 2021 — was minutes away from potentially incurring a $16 million penalty on his $75 million loan had he not intervened with a 2,000 ETH backstop mere minutes before his liquidation.

"First big liquidation now seems all but guaranteed to incur a $16.5M penalty," The DeFi Dan wrote on X at about 2:10 p.m. ET. "This account hasn't woken up since November, and has just 60mins to avoid liquidation."

Nearly all markets are retracing ground amid a worsening macro backdrop. Analysts are bracing for a potential correction across equities and risk assets following President Trump’s announcement that tariffs are here to stay. Crypto in particular has been hit hard following the lukewarm reception of the inaugural White House crypto summit on Friday. Bitcoin has pulled back below $80,000 and ETH below $2,000 for the first time in months.

Before sending over $4 million in additional ETH from Bitfinex, the whale’s liquidation price was around $1,932.08, with the window closing around 2:59 p.m. ET. He had an open loan of about $75 million worth of DAI backed by 65,675 worth of ETH at a 176% debt-to-collateral ratio.

The additional collateral gave him additional breathing room, lowering his liquidation price to $1,874.98 and bumping his loan ratio to 181.95%. ETH is currently trading at around $2,006.90, according to The Block’s ETH price data .

While the trader narrowly avoided liquidation, the risk is still live. ETH has been volatile and can easily go lower. He could continue to add ETH to his collateral position to further lower the liquidation price, but the only way to ensure he isn’t wiped out by a particularly long red candle is by paying off his debt.

"The liquidation price of the vault is at 1874.98 so they are safe. If the price of ETH continues to decline below $1874.98, the Oracle will catch it, and then after a 1 hour delay they will get liquidated," Niklas Kunkel, founder of Chronicle Labs, which created the oracle Maker uses, told The Block. "Next price that is queued up is $1850.36 which will finalize at the top of the next hour (20:00 CET). This will liquidate that vault UNLESS they pay down some of their debt or add more collateral."

@andy8052, a former Maker employee who was also tracking the status of the loan on Crypto Twitter, notes that Chronicle oracles update every hour based on the lagging price of the previous hour. It's a system designed to give users advanced warning if they'll be liquidated and a grace period to try to bolster their collateral or pay off their debt.  

"You can see when the oracle updates in ~30 mins he will be liquidated unless more collateral is added," Andy noted . "Liquidation isn't just an instant nuke of the ETH."

Maker applies a liquidation penalty to vaults that become undercollateralized and are liquidated. The fee is added to the outstanding debt and represents a user's minimum loss. The protocol then auctions off a users collateral, and they will be responsible for the remaining balance plus the penalty fee if the loan cannot be repaid in full. 

DeFi protocols are designed to limit the amount of human bias in finance by using programmatic smart contracts that function based on pre-written rules. Maker is a decentralized lending platform that enables users to permissionlessly take out loans in its DAI stablecoin by putting up overcollateralized amounts of cryptocurrencies. Key parameters like the liquidity ratio, stability fee (a.k.a. interest rate) and liquidation penalty are determined by the specific vault being drawn from, which set risk levels based on the quality of asset being pledged and a user's risk tolerance. The ETH-C vault the whale is using, for instance, has a minimum collateralization ratio of 170%.

In the past 10 minutes (at time of writing), the user has withdrawn over $1.5 million worth of USDT from Binance, swapped it for DAI on Uniswap and paid down a portion of his loan. This lowered his liquidation price to $1,836.34.

Editor's note: Adds additional context about repayment and auction process.