Deepest 24-Hour Decline! Venus Protocol Exploited by Whales, Massive Liquidation Leads to XVS Rollercoaster

The overall cryptocurrency market experienced a significant market correction today. Among them, Venus (XVS), a decentralized lending platform on the Binance Smart Chain, saw the largest 24-hour decline within the Binance exchange. It is reported that this is related to malicious lending activities within the Venus protocol and a series of liquidations of XVS tokens.

XVS Abnormal Volatility

The chart above shows the price of XVS on the Binance exchange. From the chart, it is evident that the price of the XVS token has experienced abnormally high volatility, surging by 83% in the past 24 hours, only to plummet by over 60% from its peak. Founder Joselito mentioned on Twitter that the price fluctuations of XVS are caused by the liquidation mechanism of the Venus protocol.

https://twitter.com/Joselito/status/1394813418738176001

Massive Liquidation Triggered by Whale

According to Twitter users, the primary reason for the liquidation seems to be related to a whale holding XVS tokens.

There was a big buyer in @VenusProtocol who lent 4,100 btc，9,600 ether, at the peak of the XVS price, which will continue to be liquidated. A cleared XVS dump on the market could cause a chain drop in the currency's price. Wonder how the big one has nearly 200W $XVS pic.twitter.com/SrIMLc2IFb

— Loners Liu📜 (@LonersLiu) May 18, 2021

Reportedly, the whale purchased a large amount of XVS on Binance yesterday and when the price reached $140, they deposited around 2 million XVS (worth over $200 million at the time) into Venus as collateral, borrowing 4152 bitcoins and 9686 ethers with a very high collateral ratio. Subsequently, due to the drop in XVS token price, some collateral was liquidated, which further led to a decline in token price, triggering liquidation again, creating a vicious cycle. Additionally, given the massive liquidation amount, even if the XVS is liquidated, the post-liquidation assets may still not be enough to repay the outstanding debts of over $100 million in 4152 bitcoins and 9686 ethers.

As for the borrowed bitcoins and ethers, it is uncertain whether they have been used for selling in the market, andBinance Co-Founder He Yi recently stated in the community that an investigation into this incident is underway.