One of the best parts of DeFi is its transparency, and recent events in the lending market have made that clear. Everyone in the market can see who is borrowing what, how much they are borrowing and, perhaps most importantly, at what price level they are risking liquidation.
Contrast that to various deals Three Arrows Capital has entered into with partners, some of which were allegedly done without any guarantees and based solely on the good word of the 3AC crew. (Oops.)
During the current crypto crash, it was also interesting to see how the liquidation mechanisms within DeFi worked automatically. There were no backdoor deals to salvage positions, and all rules, like loans made, were fully transparent.
Suppose you want to borrow Wrapped Bitcoin (WBTC) on Aave. You will need to be fully aware of the 80% liquidation threshold, whether you are the largest hedge fund in the world or a student in Mumbai. The rules are the rules.
With that in mind, you can also equip yourself with ways to measure the health of major lenders. We can identify the portfolios of these platforms and watch them head towards liquidation (or add more collateral to avoid the worst).
This week, we got a glimpse of how Celsius has slowly but surely supplemented several of its DeFi positions.
After collecting the different crypto wallets belonging to the lender (11 were identified on Etherscan), we then created an activity ApeBoard on all of these addresses. ApeBoard is a handy viewer for crypto wallets. Instead of just using Etherscan and tracking strings of letters and numbers, the platform shows how wallets work a bit more clearly.
It looks like this:
This tool is also handy because we can see which tokens they hold in large quantities (looks like Lido’s Staked Ethereum and Wrapped Bitcoin were Celsius’ favorites), which protocols these wallets primarily use (Aave and high ranked Compound), and how many debt these portfolios contain.
First, we can see that this collection of wallets has a net worth of over $1.3 billion. We can also see that she has a debt of more than 258 million dollars.
A quick scroll down the dashboard shows that this debt is split between Compound and Aave in borrowed DAI and USDC.
Let’s dive into this Aave and Compound activity. After all, just over 50% of all tokens in these wallets are held between these two protocols. And, more importantly, digging into this is relevant for a company whose withdrawals have been halted for just over three weeks.
The Cumulative Crypto Transaction History tab for this wallet shows that one of Celsius’ wallets repaid approximately $50 million in loans to Compound this week in three transactions: here, here, and here. On July 3, Celsius also appears to have repaid another USDC $50 million loan to Aave.
That’s just over $100 million in debt repayment this week alone. Clearly, Celsius is scrambling to get its books in order. But whether he will prevail or simply delay the inevitable remains to be seen.
And while the portfolio analysis above may be compelling for Celsius users, a recent report suggested that Sam Bankman-Fried looked at the company’s books and decided it was impossible to save. Obviously, we don’t see the whole picture just by looking at portfolio data on ApeBoard.
Pay attention, people. Chances are that this summer’s bear market is just beginning.
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