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3% drop in PT-reUSD triggered $36.4M in Ethereum DeFi liquidations
A large YT-reUSD trade pushed PT-reUSD down about 3%, triggering automatic collateral sales that led to roughly $36.4 million of liquidations on Morpho, according to CoinDesk.
A roughly 3% decline in PT-reUSD triggered about $36.4 million in liquidations on Morpho, after a large trade in YT-reUSD pushed the collateral token’s price lower, according to CoinDesk. Borrowers that had repeatedly used PT-reUSD as collateral to borrow USDC, then buy more PT-reUSD, entered positions with less than 3% of protection against liquidation.
The collateral at issue was PT-reUSD, a token issued on Pendle and tied to reUSD, a dollar-denominated asset that pays interest to holders. Pendle splits an interest-paying asset into two tokens, YT-reUSD and PT-reUSD, which behave like a seesaw, with prices needing to adjust so they add up to the whole.
CoinDesk reported that Pendle said the price feed worked as designed, and Steakhouse Financial said lenders suffered no losses, no bad debt was created, and the underlying reUSD asset was unaffected. Blockchain security firm PeckShield said one wallet bought a large amount of YT-reUSD, driving the implied annual yield up to 20%, then sold shortly afterward.
The collateral drop mattered because Morpho sells collateral automatically when it falls below a set level, repaying the loan without asking the borrower. The price move was described as ordinary for crypto, but the leveraged strategies built on top of PT-reUSD could not withstand the shift.
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