[Update] BNB Chain Initiates Liquidation of $200 Million Debt on Venus Protocol

On the evening of August 21, 2023, despite the sharp decline in BNB price to its lowest in a year, $200 million worth of BNB collateral on the Venus protocol has not yet been liquidated.

The $200 million BNB still remains unliquidated despite the price drop to $212. Image: Protos

Updated as of the evening of August 21:

Around 06:00 PM GMT+7 on August 21, the BNB loan on Venus from the BNB Chain hacker's attack continues to be in a precarious state.

The health factor of the BNB loan has dropped to 0.99 - below 1 signifies the liquidation threshold has been reached. However, according to community observations, the mandatory liquidation has not been triggered.

Meanwhile, the price of BNB is fluctuating around $209, down 7% over the past 24 hours.

15m chart of BNB/USDT pair on Binance at 06:00 PM on August 21, 2023

According to Wu Blockchain, Binance co-founder He Yi reassured the community that Binance will cover this loan. This means the liquidation will be manually executed, not dumping BNB into the market, implying that BNB price will not be significantly affected.

Update as of the morning of August 18:

Around 08:30 AM GMT+7 on August 18, the BNB loan from the BNB Chain hacker began to be liquidated, with the recorded value being 1.1 million BNB (valued at $5.5 million USD).

By noon on August 18, the liquidated amount had risen to 6.7 million vBNB, worth $63.7 million USD.

The remaining amount in the hacker's wallet is 784,237 BNB, valued at $171.3 million USD.

Venus Protocol has also posted a confirmation of the partial liquidation of funds, affirming that it will not impact the market.

Original article:

As reported by Coin68, one of the "slow-burning bombs" in the cryptocurrency market is the $200 million BNB collateralized to borrow stablecoins by the BNB Bridge hacker's attack in October 2022.

This $200 million worth is set to be liquidated if the BNB price drops to the $219-220 range, which nearly occurred in mid-June 2023.

In the early hours of August 18, during the cryptocurrency market downturn following news of SpaceX selling Bitcoin, BNB price briefly plummeted to $212.5 on Binance. This marked the lowest price for BNB since June 2022.

At the time of writing, BNB has recovered to $218, hovering just above the updated liquidation threshold of $217.3.

1D chart of BNB/USDT pair on Binance at 08:40 AM on August 18, 2023

However, according to many observers and data from DefiLlama, the BNB amount has not yet been liquidated.

Statistics on at-risk BNB positions. Source: DefiLlama

In June, BNB Chain announced to the community that in the event the health factor of the loan drops below 1.00 - indicating the liquidation threshold is reached - the project will step in to take over the bad debt from Venus, followed by a manual liquidation to prevent Venus's system from automatically dumping BNB into the market. BNB Chain also injected $60 million USD into the designated address to manage the hacker's BNB Chain loan.

However, it has been pointed out that the designated liquidation address of BNB Chain actually initiated a transaction to begin the liquidation process but failed and decided to withdraw.

Recently, Binance has been increasing the frequency of launching projects via launchpad and launchpool to prevent BNB from falling below the $220 range.