Why Margin Calls and Bot Liquidations Are Roiling Crypto
— Margin, Roiling, Defi, Bot, Apps, Collateral, Steth, Calls, Crypto, Liquidation, Usually, Prices, Liquidations — 1 min read
In traditional markets, trading with borrowed money is called borrowing on the margin. The value of the collateral put up against the loans drops, forcing lenders to call for more collateral. Liquidation of positions when margin calls aren’t met usually happens automatically. Many DeFi apps offer a liquidation bonus to the bots, which are run by third-party programmers and traders. The total value locked in DeFi, the amount of crypto in use on apps, plunged to $76 billion on June 24 from $205.7 billion on May 5, just before the Terra blockchain's implosion set off the year’s biggest crypto crisis so far. Some unprecedented steps have been taken, though some of them were rescinded, but some have been rescinded. Source