Recently, the hot topic among everyone is Ethereum bull Yili Hua, who has a liquidation position likely between 1800-1900. Many people want to buy coins in this range, but this range is actually quite dangerous, I checked.

From the chart, we can see that there are a large number of positions around 1900 that may be liquidated, especially after falling below 1900, which could liquidate about 150 million USD. If it further drops below 1550, it will continue to liquidate about 300 million USD, and dropping below 1400 will further liquidate 400 million USD.

If it keeps falling, then more positions will be liquidated. If they are liquidated, it will create greater selling pressure, continuing to crash the market, forming a vicious cycle, which we call a chain liquidation.

What happened in 2022?

In June 2022, the price of ETH had fallen from $3,800 at the beginning of the year to the $1,200 to $1,500 range. Three Arrows Capital, being one of the largest leveraged players at that time, held a large amount of ETH and stETH with high leverage, and used it for collateralized lending on platforms such as Aave, Compound, BlockFi, Celsius, and Genesis.

When the price of ETH rapidly fell below key support → triggered insufficient collateral ratio → forced liquidation of positions across multiple platforms.

Three Arrows significantly sold off ETH/stETH, further driving down the market. On-chain data shows that around June 18, a massive amount of ETH was liquidated from addresses associated with Three Arrows (over 100,000 ETH sold, with some days reaching tens of thousands).

stETH severely decoupled (once dropping to 0.93 ETH), exacerbating the liquidity crisis, as many protocols relied on stETH as collateral, leading to more positions being liquidated, forming a death spiral of 'liquidation → sell-off → further price drop.'

So what was the reason at that time?

In May, the Terra/Luna collapse severely damaged market confidence.

On June 12, Celsius suspended withdrawals, further amplifying panic.

From June 16 to 18 was the peak liquidation period, with the entire DeFi ecosystem's ETH positions being forcibly liquidated on a large scale, exposing systemic risks from nested borrowing by institutions.

Macroeconomic factors include the Federal Reserve's interest rate hikes and global sell-offs of risk assets, which also contributed, but the direct trigger that 'smashed through 900' was the liquidation pressure from institutions.

So how much was liquidated at that time?

From June 16 to 18, the total amount of DeFi ETH liquidations was approximately $100 million to $150 million (according to EigenPhi and DeFiLlama data, with some reports exceeding $100 million in a single day).

In the days around June 18, 3AC liquidated ETH worth tens of millions to over $100 million (with a cumulative liquidation scale reaching hundreds of millions).

The sell-off pressure from ETH liquidations directly caused by Three Arrows' collapse is estimated to be in the hundreds of millions (reports from The Block and others indicate at least $400 million in institutional liquidations, with Three Arrows' overall bad debts/liquidation scale being larger).

Throughout June, the total amount of DeFi lending liquidations (mainly in ETH) reached hundreds of millions to over $1 billion, and combined with CEX futures liquidations, the total liquidation amount across the entire crypto market was even higher (but the purely on-chain lending ETH portion was mainly institutional).

This wave of liquidations directly pushed ETH below 900, evaporating hundreds of billions in market value across the entire chain (ETH fell from about $1,800 at the beginning of June to a low point, resulting in a market cap loss of over $10 billion).