Aave v3 Records Its Highest-Ever Liquidation Volume of $253.4M Amid Market Crash

More than half of the liquidations ever recorded on Aave v3, the top DeFi lending market, took place over the past 24 hours amid a violent crypto market crash.

Liquidations on Aave v3 Surged to $253.4 Million Amid Crypto Market Crash

Blockanalitica data shows that on July 5, a total of $253.4 million in positions were liquidated on Aave v3, bringing the total value of margin calls executed on the protocol to $428.9 million. This means that 59% of all recorded Aave v3 liquidations occurred within 24 hours.

Of the total liquidations on Aave v3, Wrapped ETH (WETH) accounted for the lion’s share with $146.7 million, followed by Wrapped stETH (wstETH) with $68.4 million, and then Wrapped Bitcoin (WBTC) with $24.3 million.

The heavy margin calls briefly drove up the interest rates paid by Aave on ETH deposits to roughly 14%, but these rates have since dropped back to 2% after digital assets markets posted a modest bounce.

Crypto Markets Saw a Sell-Off, Driving Liquidations

The liquidations were driven by a violent sell-off across crypto markets that coincided with bloodshed across major stock markets.

In 24 hours, Bitcoin fell 13%, while Ethereum dropped 20%, and Solana sank 16%. The combined market crashed 13% over the period, dipping below $2 trillion for the first time since February.

Meanwhile, the Nikkei 225 in Japan dropped 12.4%, the KOSPI in South Korea sank 8.77%, and the Taiex in Taiwan crashed by 8.35%.

Other DeFi Protocols Also Saw Surging Liquidations, While stETH Lost Ground Against ETH

Aave users were not alone in suffering hefty margin calls, as rival DeFi lending protocols also saw a surge in liquidations.

MakerDAO’s Spark Protocol also hosted record liquidations, with $35 million in positions being liquidated in 24 hours, which is 80% of the total liquidations processed by the platform. At the same time, Maker’s DAI stablecoin suffered $9.79 million in margin calls.

On Compound, there were $34.8 million in liquidations, which is 18.7% of the protocol's lifetime margin calls. Of the seized collateral, WBTC had $22 million, followed by WETH with $9.37 million, and Chainlink (LINK) with $2.85 million.

According to The Block, Morpho Blue also had notable liquidations of $18.1 million.

Amid the carnage, Lido’s liquid staking token, stETH, notably lost ground against ETH, CoinGecko data shows. From trading at more than 0.999 ETH, the price of stETH fell to a low of $0.983 ETH, though it has since recovered to 0.99 ETH.

According to an analysis by Santiment in June, heavy liquidations on DeFi protocols could indicate that the crypto market capitulation is nearing its end.

“Historically, when Aave and Compound liquidations spike… it is followed immediately by market rebounds, due to the immediate forced selling followed by opportunistic buying,” Santiment said. “Bullish traders await these liquidations as a sign that BTC can quickly rebound.”

The total value locked (TVL) in the broader DeFi sector also fell to $111.5 billion, its lowest level since February. According to DeFi Llama, more than $24 billion was wiped from DeFi protocols in a single day, marking a 17% drop.

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