If the USDC discounts again by 10%, the position exceeding US $70 million may face liquidation risk

It is reported that traders who use the DeFi agreement to bet on the recovery of the USDC at the weekend will face 8-digit liquidation risk if the stable currency breaks anchor with the US dollar again this week.

Interpretation of this information:

The article highlights the potential risks associated with traders who use Decentralized finance (DeFi) agreements to bet on the recovery of the US dollar-anchored stablecoin (USDC) during the weekend. According to the report, traders may face an 8-digit risk of being liquidated if the USDC breaks anchor with the US dollar during the week.

DeFi agreements are blockchain-based financial protocols that allow users to engage in financial activities without intermediaries such as banks. Stablecoins are an essential component of DeFi, as they provide a more stable value than other cryptocurrencies that are prone to volatility. USDC is a popular stablecoin pegged to the US dollar’s value, making it a popular currency for DeFi traders looking to protect their investments from volatility.

However, the report notes that traders who bet on the USDC’s recovery at the weekend may face significant risks if the stablecoin breaks anchor with the US dollar during the week. If this happens, the value of USDC may plummet, triggering liquidation events for traders who used the currency as collateral to take out loans or make investments.

A liquidation event occurs when a trader’s collateral’s value falls below the amount borrowed or invested, forcing the trader to sell their assets to pay back the loan. In cases of extreme volatility, the sale of assets may trigger a chain reaction of further liquidation events, leading to a market crash.

The article highlights the risks associated with DeFi trading and the need for caution when using stablecoins and other financial instruments. While DeFi offers many benefits to traders, such as lower fees and greater control over investments, it also comes with significant risks due to the absence of regulations and oversight.

In summary, traders who use DeFi agreements to bet on the recovery of US-dollar anchored stablecoins such as USDC over the weekend may face an 8-digit liquidation risk if the stablecoin breaks anchor with the US dollar during the week. The risks associated with DeFi trading underscore the need for caution and vigilance when using stablecoins and other financial instruments.