$36 Million Liquidations Unleashed on Morpho from 3% Token Decline

A sudden drop of just 3% in PT-reUSD, a principal token issued on Pendle, triggered $36.14 million in liquidations on Morpho's Ethereum-based lending platform.

The decline occurred early Tuesday, August 25, 2026, after one wallet made a large purchase of the corresponding yield token YT-reUSD, driving the implied annual yield up to 20% before selling out of the position shortly afterward.

Borrowers had repeatedly used PT-reUSD as collateral to borrow USDC and buy more PT-reUSD, leaving their leveraged positions with less than 3% of protection against liquidation.

Thirty-three liquidation events occurred within a 14-minute window, repaying $36.14 million of debt, with the USDC market accounting for $35.19 million.