The biggest whale in the Fantom ecosystem known as “Roosh” took a huge loan that nearly crash Fantom protocol this week. Roosh deposited $90 million worth of FTM that was used as collateral to obtain SOLID and DUES tokens. The tokens obtained were then locked for 4 years in a staking contract.
Following the DeFi loan obtained by the whale, Bitcoin’s dip in price led to sharp price dumps in other altcoins, including FTM which wasn’t spared. So far, BTC prices are pinned below $40k, exerting pressure on altcoins, due to their direct correlation. The sharp correction of FTM prices left the Fantom whale, exposed, lowering his loan-to-value ratio precariously above the threshold at 1.02, forcing the lender to margin call him.
Typically, DeFi loans carry a measure of risk and deposited collaterals can be liquidated when the ratio drops to 1. This is because loans are overcollateralized as a protective measure for the protocol and liquidity providers.
To avoid or postpone liquidation of the $90 million FTM tokens, Roosh further obtained an emergency loan worth $2 million from Dr. Liquid. However, this extra loan to cover his FTM collateral was not enough to avoid liquidation.
The price of FTM initially dropped from $0.85 to $0.79 before slightly bouncing to $0.82. This slight recovery was only sustained for a short period. A few hours after regaining $0.82, FTM further plummeted to $0.76, forcing the liquidation of some of the whale’s collateral.
Roosh, who initially deposited 59 million FTM, is now left with roughly 19 million FTM. A further drop in the price of Fantom will lead to additional liquidation of the collateralized FTM tokens.
The huge volume of Fantom tokens liquidated has caused many holders of the Fantom token to sell in panic. FTM is currently trading at $0.70, according to trackers. The FUD in the ecosystem, as well as the general bearish sentiment in crypto, indicates that FTM may be subject to more selling pressure in the immediate term. This would be negative for Roosh who may have to liquidate his assets.
Fantom token had an all-time high of $3.48 and currently has a market cap of $1.7 billion.
