An ETH treasury company is selling its ETH below its purchase price — just to save its own loan.
Fact: BTCS, a Nasdaq-listed company that holds ETH as its primary asset, disclosed in its quarterly report (Form 10-Q, filed Nov. 13) that it sold some ETH below its cost basis to maintain the health factor on its $64.1 million loan on Aave (CoinDesk, Nov. 13; confirmed by KuCoin News). As of Nov. 9, the debt was backed by 46,676 ETH worth $99.3 million — a health factor of around 1.24, with a liquidation threshold of about $1,717 per ETH. The company had only about $463,000 in cash at the end of September, and most of its digital assets had already been pledged as collateral. No liquidation had occurred as of Nov. 11.
My take: This is the other side of the treasury story, which is usually all about accumulation. DeFi leverage works both ways: when prices fall, companies are forced to sell at a loss to stay afloat — the exact opposite of “buying the dip.” With ETH now around $1,940, it’s about 13% away from the liquidation threshold — not far in a market like today’s.
What I’m watching: whether ETH stays above $1,717, and whether other treasuries with DeFi debt are found to be doing the same thing.
What do you think: are treasuries borrowing in DeFi a fragile business model, or just an example of reasonable risk management?
This is my analysis, not financial advice — always DYOR.
#Ethereum #DeFi $ETH
Fact: BTCS, a Nasdaq-listed company that holds ETH as its primary asset, disclosed in its quarterly report (Form 10-Q, filed Nov. 13) that it sold some ETH below its cost basis to maintain the health factor on its $64.1 million loan on Aave (CoinDesk, Nov. 13; confirmed by KuCoin News). As of Nov. 9, the debt was backed by 46,676 ETH worth $99.3 million — a health factor of around 1.24, with a liquidation threshold of about $1,717 per ETH. The company had only about $463,000 in cash at the end of September, and most of its digital assets had already been pledged as collateral. No liquidation had occurred as of Nov. 11.
My take: This is the other side of the treasury story, which is usually all about accumulation. DeFi leverage works both ways: when prices fall, companies are forced to sell at a loss to stay afloat — the exact opposite of “buying the dip.” With ETH now around $1,940, it’s about 13% away from the liquidation threshold — not far in a market like today’s.
What I’m watching: whether ETH stays above $1,717, and whether other treasuries with DeFi debt are found to be doing the same thing.
What do you think: are treasuries borrowing in DeFi a fragile business model, or just an example of reasonable risk management?
This is my analysis, not financial advice — always DYOR.
#Ethereum #DeFi $ETH