IntoTheBlock: "High Risk" Crypto Loans on Benqi Surge to Highest Level in Two Years at $55 million

According to data tracked by analytics firm IntoTheBlock, the total volume of high-risk loans, defined as those within 5% of their clearing price, rose to $55 million on Wednesday, the highest level since June 2022.
Cryptocurrency traders typically obtain loans from decentralized lending platforms by locking up collateral in the form of digital assets. The risk here is that if the value of the collateral falls 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 falls by 5%, it will no longer cover the loan, triggering a liquidation.