IntoTheBlock: ‘High-risk’ crypto loans on Benqi surge to two-year high of $55M

According to analysis company IntoTheBlock's tracked data, the total amount of high-risk loans (defined as loans with a liquidation price within 5%) rose to $55 million on Wednesday, reaching the highest level since June 2022. Cryptocurrency traders typically obtain loans from decentralized lending platforms by locking in digital assets as collateral. The risk here is that if the value of the collateral drops too much, the protocol will liquidate the debt by selling the collateral. A loan within 5% of the liquidation price means that if the price of the collateral drops by 5%, it will no longer cover the loan, triggering liquidation.