A significant financial loss has been reported on the Venus Protocol, a decentralized finance platform on the BNB Chain, where a major investor, known as a ‘whale,’ incurred a $1.09 million loss. The loss occurred due to a leveraged position in the Venus (XVS) token, which collapsed following a sharp 30% market downturn. The whale had borrowed 1.4 million USDT against XVS holdings to purchase an additional 532,000 XVS tokens, valued at $2.81 million at the time.
As the XVS price fell, the position’s Health Factor dropped, triggering an automatic liquidation. The protocol seized and sold 287,000 XVS tokens to repay $930,000 of the loan, crystallizing the loss. This event underscores the risks associated with DeFi leverage, where automated liquidation mechanisms can lead to rapid losses during volatile market conditions. The remaining position is still at risk, with a Health Factor of 1.07, close to further liquidation.
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