- The Ethereum Foundation is threatened by a possible liquidation of $ 900 million, since a corresponding amount of ETH is stored as security in a makerdao-safe.
- Salvation decline below $ 1,100 could trigger automatic liquidation of the blocked assets and have a significant impact on Ethereum.
According to reports, the Ethereum Foundation is exposed to a financial risk, since a considerable amount of Ethereum (Eth) is enclosed in a Makerdao-safe, which leads to a debt of around 78 million DAI, a dollar-bound stablecoin.
Makerdao is a decentralized finance platform (Defi) that enables users to borrow by providing their cryptocurrency values, mainly ETH. The users deposit ETH into the Smart Contracts from Makerdao and thus create secured guilt positions (Collateralized Debt Positions, CDPS), which are now referred to as safes. The stored ETH serves as security and enables users to generate DAI loans.
In order to maintain system stability, Makerdao requires that the value of the collateral exceeds the borrowed DAI, which forced a consecration rate. If the value of the collateral falls below this ratio due to a drop in price, the system automatically liquidates the collateral to repay the debts and to ensure the stability of the DAI.
Potential liquidation scenario at $ 1,100 ETH
The speculation After the deposit of 30,098 ETH, a maker vault increased through a possible liquidation of the Ethereum Foundation by a wallet that is probably part of the foundation. This wallet currently holds 100,394,447 ETH as security, with an outstanding guilt of 78.035.224,7182 DAI and a liquidation price of $ 1,127.065. Despite increasing speculation and concerns of the community, neither the Ethereum Foundation nor its co-founders have publicly commented on the liquidation risks in connection with their Makerdao-S result.
The blockchain expert Rasmr pointed out the seriousness of the situation and explained:
“If the Ethereum Foundation is liquidated at $ 1,100, this is the FTX moment of this year.”
In a subsequent posting, however, he added:
“It is funny to joke about the liquidation of the Ethereum Foundation, but let’s be honest, if you are close, you will simply add collateral.”
Ethereum has currently fallen by 10.30 % in the last 24 hours and lists at $ 1,900. This is the first time in 2023 that ETH fell under the threshold of $ 2,000. In the meantime, the 24-hour trade volume of ETH has increased by 4.08 % and reached $ 39 billion.
The Ethereum Foundation holds a considerable amount of ETH in its treasury. As of October 31, 2024, their reserves were rated with $ 970.2 million, which means a decrease of 39 % compared to $ 1.6 billion on March 31, 2022. Since 81.3 % of their assets are created in ETH, any loss of price could be a financial risk, even if the foundation has the opportunity to mitigate a possible liquidation through additional collateral.
Between 2022 and 2023, the foundation provided around $ 240 million for the development of the ecosystem, research and other initiatives.
In the middle of these financial concerns reported CNFthat the Ethereum Foundation has announced the appointment of HSIAO-Wei Wang and Tomasz Stańczak as Co-Executive Directors with effect from March 17, 2025. Your leadership is expected to strengthen the core principles of the foundation and play a crucial role in the design of the future of Ethereum.
