Celsius Fully Repays MakerDAO Debt

Key Takeaways

  • Celsius has repaid its $41.2 million debt to MakerDAO, which enabled it to unlock the 21,962 wBTC it had been utilizing as collateral.
  • If Celsius bought its wBTC right now, it might undergo a $1 billion loss on its lending technique.
  • Celsius has been coping with a liquidity disaster since market costs plummeted and Three Arrows Capital collapsed final month.

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Celsius has totally paid off its debt to MakerDAO, unlocking about $456 million value of wrapped Bitcoin. It’s affected by a possible $1 billion loss on its MakerDAO lending technique.

$41 million to Free Up $456 million

It appears like Celsius has lastly paid off its debt to MakerDAO.

Etherscan knowledge reveals {that a} pockets recognized as belonging to the struggling crypto lending firm totally repaid a $41 million debt in DAI right now to free its collateral of 21,962 wBTC (value round $456 million at press time). The pockets closed the MakerDAO vault shortly after paying off the debt.

MakerDAO is a DeFi protocol that lets customers mint the DAI stablecoin after they deposit collateral. Celsius is a so-called “CeDeFi” platform that acts as an middleman for patrons, leveraging alternatives discovered on DeFi protocols like MakerDAO. Celsius and several other different main crypto lenders have suffered from main liquidity points in current weeks following Terra’s collapse, a downturn out there, and the crypto hedge fund Three Arrows Capital’s wipeout. 

Whereas the Celsius pockets was now not at extreme danger of liquidation by the point full reimbursement was made (Bitcoin would have needed to hit round $2,722 to set off a liquidation), knowledge from DeFi Discover reveals that on Might 12 a $700 Bitcoin transfer may have liquidated the vault. Celsius added wBTC and DAI on a number of events following Might 12 with a view to improve the collateralization ratio and forestall a liquidation. 

The overall worth added to the vault over time was $1.8 billion, whereas the overall worth retrieved was about $757 million. It’s because Celsius was pressured to maintain repaying DAI to keep away from a liquidation, and Bitcoin has additionally dropped in worth because it opened the vault. If Celsius bought its wBTC right now, it might guide an nearly $1 billion loss on its MakerDAO lending technique. Curiously, Celsius transferred 24,462.6 wBTC to crypto alternate FTX shortly after it was unlocked.

Celsius controversially paused buyer withdrawals final month with a view to put itself “in a greater place to honor, over time, its withdrawal obligations.” It has since employed advisors to assist it take care of potential chapter. It’s now below investigation by the Securities and Alternate Fee in addition to regulators from 4 completely different U.S. states.

Disclosure: On the time of writing, the writer of this piece owned ETH and several other different cryptocurrencies.

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