A major liquidation of over $106 million in Ethereum assets occurred on April 6, 2025, amidst a significant market downturn. This event highlights vulnerabilities within leveraged DeFi positions and underscores the need for effective risk management strategies in decentralized finance (DeFi).
Ethereum’s price plummeted by 14% following news of U.S. tariff announcements, triggering liquidation on the Sky protocol. The whale attempting to stabilize their position via ETH addition failed as conditions worsened, leading to the automatic execution of Sky’s liquidation mechanism. This incident underlines past DeFi system vulnerabilities and is reminiscent of similar liquidity events previously experienced in the space.
This event impacted a wide range of cryptocurrencies, including SOL, XRP, and BTC, deepening market sentiment’s negativity. Overall cryptocurrency capitalization was also affected by this downturn. The event highlights the risks associated with leveraged positions in volatile market conditions.