Celsius repays $ 183 million on DeFi Protocol Maker, gets security back, blockchain data shows
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Celsius, the cryptocurrency lender that has stopped withdrawals and allegedly cuts jobs to avert a liquidity crisis, has aggressively repaid debt on one of the largest decentralized financial protocols (DeFi), blockchain data shows – possibly to get back bitcoin-equivalent tokens that had been posted on the platform as security.
Since July 1, according to the chain’s data, Celsius has repaid $ 183 million of its collateralized debt to Maker, one of the largest decentralized lending platforms. Transactions on the blockchain data tracker Etherscan confirm that the repayments originate from a wallet connected to Celsius. The debt was repaid in the Maker Protocol’s native stablecoin, DAI.
The transactions not only resulted in the cancellation of the debt, but the release from Maker of 2000 wrapped bitcoin (worth $ 40 million) that had been posted as collateral, the data shows. Wrapped bitcoin (WBTC) is a token configured for the Ethereum blockchain that represents bitcoin (BTC) – the largest cryptocurrency by market value and thus one of the most liquid.
Celsius still owes 41 million DAI (about $ 41 million worth) in loans to Maker, but it has around 22,000 wrapped bitcoin (about $ 440 million worth) against these loans – so it could be an even bigger potential kicker if the rest of the debt was repaid .
“By repaying the debt, Celsius may release collateral (BTC) which can then be sold on centralized exchanges or over-the-counter to meet creditor claims and customer withdrawals,” Fundstrat analyst Walter Teng told CoinDesk.
“Given that DeFi loans are covered by collateral, it makes sense for them to do so, since the value released by repaying their loans (collateral minus loans) is greater than the value of the loans themselves (if they choose not to repay). “
Celsius representatives did not immediately return emails requesting comments on the blockchain data or transactions.
The beleagured crypto-lender is striving to protect and preserve its assets to avoid insolvency, following a tough one against the finances from the implosion of the Terra blockchain and its UST stablecoin in May, and then in June from the failure of the once top tier crypto. hedge fund Three Arrows Capital.
Celsius suspended withdrawals and transactions for its 1.7 million users as of June 12, hired restructuring consultants and has reportedly cut 150 jobs. Regulators have opened surveys of the company.
The original token for the Celsius platform, CEL, has fallen 80% this year.
Read more: How Crypto Lender Celsius got overheated
As of May 2022, the company had lent more than $ 8 billion to customers and had $ 12 billion in assets under management.
Loans on decentralized financial platforms such as Maker are generally over-mortgaged, which means that the borrower mortgages more assets in value to the lender than the value of the loan.
Another advantage of the loan payments is that it reduces the price point (of wBTC) where the Celsius collateral will be automatically liquidated by the Maker protocol.
Following the payments, the liquidation level of Celsius wBTC collateral fell to $ 2,722, according to the website DeFi Explore. WBTC is now trading at $ 20,200, making the loan 1,101% (approximately 10 times) collateral.
