Ethereum Triggers Record Liquidations on Aave V3 Following Market Volatility

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• Ethereum’s sudden price drop on April 6–7 triggered $98.6 million in liquidations on Aave V3, marking the largest since February.

• Despite the volatility, Aave’s systems held firm, and investor activity proves ongoing confidence in ETH’s long-term value.

Ethereum’s sharp selloff over the weekend has triggered the largest single-day liquidation event on Aave V3 since February 2025, due to the ongoing market instability in the DeFi lending space.

Between April 6 and 7, Ethereum dropped more than 20%, briefly hitting a multi-year low near $1,680. The steep decline led to $98.6 million in liquidations on Aave V3, with ETH-based assets accounting for approximately $66.9 million, or 68% of the total.

The majority of the liquidations happened on the Ethereum mainnet, where Wrapped Ether (WETH) and Wrapped Staked Ether (wstETH) were the most affected, responsible for $63 million and $12 million in liquidations, respectively.

Despite the seriousness of the event, Aave’s risk management systems were able to prevent new bad debt. According to data from Chaos Labs, the protocol was able to process all liquidations cleanly, underscoring the platform’s ability to withstand volatility events without introducing systemic risk.

This liquidation spell followed Ethereum’s drop to levels of around $1,680, caused by global market breezes like increased geopolitical tensions and renewed economic angst. The sharp drop left a lot of very leveraged longs in the red, triggering cascading liquidations on the DeFi side.

Large Investors Accumulate ETH During Volatility

While the downturn led to mass liquidations, it also presented an accumulation opportunity for some investors. Blockchain data shows one wallet acquired nearly 16,000 ETH—valued at more than $26 million—before depositing it into Aave and borrowing $15.4 million in USDT. The acquisition is a testament to continued confidence in ETH’s long-term fundamentals despite near-term price pressure.

Ethereum has since rebounded modestly and is trading around $1,639 as of April 14. Market analysts remain divided on the asset’s short-term trajectory. Some predict a potential rally later this year, caused by institutional demand, growing DeFi activity, and technical upgrades. Others cite increased competition from Layer-2 networks and potential regulatory shifts as risk factors that could weigh on Ethereum’s performance.

Looking ahead, Ethereum’s Pectra upgrade—scheduled for May 2025—intends to introduce several improvements, including support for gasless transactions and multi-token fee payments. These features are expected to improve usability and further position Ethereum as a developer-friendly platform, further strengthening its ecosystem.

While the recent liquidations attest to the decentralized finance volatility, the resilience of protocols like Aave and continued investor faith prove that Ethereum remains a pillar of the digital assets space.