$36 Million in Liquidations Hit Morpho After 3% Price Move

A recent price move of around 3% triggered $36.4 million in liquidations on the Ethereum-based lending platform Morpho, after a wallet's trade in a related market affected the value of borrowed collateral.

The collateral was PT-reUSD, a token tied to reUSD, a dollar-denominated asset that pays interest to holders. Some traders had deposited PT-reUSD on Morpho and used it as collateral to borrow the stablecoin USDC, buying more PT-reUSD with the borrowed money in a loop.

Each round of this trade increased potential returns but also reduced the margin for error, leaving borrowers with less than 3% headroom before their loans would be closed out automatically. A small price drop caused by a wallet's trade was enough to trigger these liquidations.