Venus liquidates additional $30M of notorious lending position

A whitelisted core BNB team address has topped up another $30m to liquidate a notorious position

article-image

Ira Lichi/Shutterstock modified by Blockworks

share

For the second time in a matter of days, liquidators have stepped in to restore the health of a notorious DeFi lending position. 

A whitelisted liquidator address controlled by core Binance Coin (BNB) team members seized $32.6 million worth of BNB on Monday morning from a notorious Venus Protocol lending position in order to liquidate $29 million worth of stablecoins. The position still has $94 million outstanding. 

The position was created in October 2022 following a Binance Smart Chain bridge hack, one of the largest in crypto history. The attacker, believed to be the North Korean-funded Lazarus Group, stole $560 million worth of BNB. 

Unable to sell all of it efficiently, they opted to deposit a major sum into Venus, using the BNB as collateral to take a stablecoin loan of $150 million that was then largely bridged to different chains. 

On lending protocols such as Venus, “liquidators” are often bots that seize collateral to sell and repay a delinquent user’s position if it falls below a certain collateralization rate. Because of the size of Lazarus Group’s BNB position, liquidation could send the price spiraling and put the protocol at risk of bad debt — and the entire ecosystem at risk of cascading liquidations. 

As a result, BNB core team members proposed becoming the sole whitelisted liquidator of the position in November 2022. The team would take on the BNB and refrain from selling it, and instead pay down the debt to prevent systemic risk. 

The team finally had to step in on Friday, using half of a $60 million stablecoin fund deposited into the liquidator address to pay off $30 million in debt across three transactions.

Earlier today, they spent the remainder of the fund and paid off an additional $30 million. 

The position currently remains unhealthy and is poised for another liquidation at a BNB price of $198. While it initially appeared that the liquidator address was out of stablecoins, an additional $30 million in USDT has been added to the address from Binance

In an interview with Blockworks, pseudonymous Venus BD & Community Lead “Danny” said that “BNB Chain will continue to monitor and manage the health of the account as necessary.”

BNB currently sits at $210.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Permissionless is a conference for founders, application developers, and users. Come meet the next generation of people building and using crypto.

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

4.png

Research

This months PPGC covered four main areas. Firstly, debriefing the progress and status of the mainnet implementation of the Ahmedabad hard fork. Secondly, a retrospective on the testnet phase of the Ahemdabad Hard Fork. Thirdly, an update on PIP-36 which involves replaying failed state syncs. Lastly, PIP-47 which pushes upgrades to the Polygon Protocol Council.

article-image

Institutions to test out the settlement of “digital assets and currencies” on a network that annually carries more than 5 billion financial messages

article-image

After Bitwise’s XRP ETF filing this week, one industry watcher notes: “Politics will determine whether this happens soon or in a few years”

article-image

Plus, a look back at some of the SEC’s biggest enforcement moves under Gurbir Grewal

article-image

The forward-looking financial system is being championed by several contributors to India’s UPI digital money system

article-image

Multiple teams are pursuing integration cross-chain and off-chain

article-image

An SEC spokesperson told Blockworks the Ripple judgment clashes with Supreme Court precedent and securities laws