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$36.4 Million in Ethereum DeFi Liquidations Stem from 3% Price Drop

Guavy AI Editorial Team
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ETH
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The Ethereum decentralized finance (DeFi) ecosystem recently experienced a significant liquidation event on the Morpho lending protocol, resulting in approximately $36.4 million in forced closings.

The incident occurred when a wallet heavily purchased Yield Token (YT)-reUSD, driving implied yields up to around 20% and reducing the value of the paired Principal Token (PT)-reUSD by about 3%

This relatively small price movement had far-reaching consequences for borrowers who had deposited PT-reUSD as collateral on Morpho and borrowed USD Coin against it

The result was a cascade of liquidations, with Morpho's automatic liquidation mechanism triggering forced position closures

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