Pricing mistake by Coinbase liquidates $103 million in loans on Compound

On Friday, November 27, almost $103 million in loans were liquidated on Compound after an oracle pricing mistake by Coinbase on the DAI stablecoin.

Pricing mistake by Coinbase liquidates $103 million in loans on Compound

On Friday, November 27, almost $103 million in loans were liquidated on Compound after a oracle pricing mistake by Coinbase, and a further $8 million in crypto loans were liquidated on lending platform dYdX. On November 12, MakerDAO’s DAI stablecoin yesterday reached a market capitalization of $1 billion for the first time. As a lending/borrowing platform, Compound allows users to borrow and lend multiple cryptocurrencies. Borrowers must place more significant collateral than the loan they are receiving over collateralized loans. If, at any moment, the smart contract notices the loan is under-collateralized, then it will automatically liquidate the loan and repay itself. As DAI's value spiked, the amount of DAI loaned out increased relative to the collateral provided. The third largest COMP farmer was liquidated for $46 million. Of the total $110 million in crypto loans liquidated, $56 million was from DAI borrowers, $38 million from Ethereum (ETH) borrowers, $10 million from USDC stablecoin borrowers, and $4 million from wrapped BTC (wBTC). “My understanding is that the DAI price on Coinbase was driven up to a premium of around 30%. Compound's oracle uses Coinbase for pricing data," according to Decrypt. This continues a rough week for Coinbase as they suspended margin trading and had to get ahead of a New York Times article alleging discrimination against black workers.