Decentralized credit protocol Maple reported that none of the platform users’ positions were liquidated during the Feb. 2 price crashes, resulting in no bad debt.
The report also stated that the users had deposited an additional $10 million in order to increase their margins and avoid liquidation. In a single trading day, Ethereum (ETH), which briefly fell to a price of $2,000 or less, and other major cryptocurrencies saw declines ranging between 10% and 30%.
Maple is a protocol for decentralized credit where users can deposit their assets in a pool which acts as credit lines for financial institutions. According to rwa.xyz Maple Managed $2.5 Billion in Loans as of February 7.
The report highlighted that Maple’s Blue Chip and High Yield Secured Lending products remained fully overcollateralized during this volatility, attributing this to margin calls issued before collateral levels became critical.
During the mass liquidations of February 2, $2 million was injected into the High Yield Securing pool.
Maple’s Blue Chip Secured lending pool only accepts Bitcoin (BTC) and ETH as collateral, held by qualified custodians. The High Yield secured pool, on the other hand, achieves a higher return by underwriting digital asset-backed loans and then reinvesting collateral into staking or secure lending.
Syrup is an investment pool that uses both strategies for a higher yield, but also more risk. The pool made margin calls on 35% of loans which resulted in $5 million new deposits.
Borrowers posted an additional $7.4 million in collateral and repaid $7.4 million in loans, strengthening Maple’s loan book stability.
By February 6, the collateralization rate across all pools was averaged at 165%.
Report also highlights that DeFi yield options were removed while vaults still produced two-digit returns annually.
Aave Processes $210 Million In Liquidations
Aave was also used as intended for the massive liquidations of Feb. 2, 2019. Chaos Labs says Money market liquidated 210 million dollars while eliminating all bad debts.
Chaos Labs highlighted that Aave’s liquidation mechanisms ensured that positions were settled efficiently. In order to reduce losses, most liquidations were performed on Ethereum’s main instance.
Despite the scale of the liquidations, Aave’s existing bad debt decreased by 2.7% due to the declining value of debt assets.
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