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/biz/ - Business & Finance

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21129483 No.21129483 [Reply] [Original]

So I was looking at the biggest LINK short on Aave. This is the address that borrowed ~1.6m LINK, the biggest borrow of LINK.

https://etherscan.io/address/0x108e4bfd9cda6243e1de53b71d08a0111974efc1#tokentxns

They then sent the borrowed LINK to this address:

https://etherscan.io/address/0x7e2e80e8250844dd4e558f13850380d5af8f0c61#tokentxns

This address itself is a little weird, it's had mostly small transactions in shitcoins and some small chainlink transactions. However 255 days ago it also received 1.6m LINK from one address and shortly sent it on to another. Can anyone figure out what's going on here?

Anyway, the address which borrowed LINK on Aave sent it on to the above address, which then sent it on to this address:

https://etherscan.io/address/0x0786449ce8be8022c2151d2efe0beb7f83a51159#tokentxns

This address has only been used for this transaction as well as a minor binance transaction. It then sent the entirety of this LINK on to here:

https://etherscan.io/address/0x4370d8c66b8c369cea16a8490c227ea1fcebad9d#tokentxns

Where it now sits.

tl:dr:

Someone deposits $22m USDC on Aave
Borrows $15m of LINK
Sends it on to several intermediary wallets and it now sits on the above wallet.

What's going on here? OTC sale? Hard to piece it all together.

>> No.21129576
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21129576

>>21129483
wallet autism is that you? bumping for interest. come on you big brains, any thoughts?

>> No.21129593

>>21129483
Borrowed and sold on Binance in order to effectively shorting it

>> No.21129732

It means we are at the local top

>> No.21129839

>>21129593
That's what the original 350k did, but not this 1.6m. It just went through a bunch of intermediaries and ended up on that end walllet.

Could be an OTC sale but I cant see any other currency changing hands against it.

>> No.21129928

Fascinating! Time to play detective!
Sergey betrayed us
NNOOOOOOOOOOOO

>> No.21129988

>>21129839
Could it be an insurance in case this person shorted Link?
If Link suddenly goes up and he gets liquidated he would keep a Link stack without being at risk of a short squeeze.
The short squeeze risk would be dumped on the Link lenders on the AAVE platform.
That's some fucked up thinking.

>> No.21130035

>>21129988
I feel like you guys are making shit up at this point. How does this even make sense. Its like the worst of wsb and biz nujacks.

>> No.21130057

>>21130035
Sure, but something's going on. It's massively risky (and expensive) to do if they're just going to sit in a wallet. What's your theory?

>> No.21130072

>>21129483
Why wouldn't you just buy $15m of link instead of using $22m usdc to get it?

>> No.21130088

>>21130035
It's a possible move, meaning it's valid and should be accounted for. Protect ya neck nigga

>> No.21130142

>>21130057
Some anons had a theory that there is not enough liquid link on the market to cover the borrowed links on aave, so the short squeeze will push the price over the zone where it is actually profitable to liquidate on aave. So I guess this transaction would be a bet on that possibility. However I am too much of a brainlet to try and figure out if this is actually possible. Any ideas?

>> No.21130154

>>21130072
Typically you borrow something to short it.

i.e you deposit USDC as collateral, borrow LINK, sell it on exchange. Thats shorting.

However these guys seem to have borrowed LINK and moved it to some other wallet where it currently sits which doesn't make much sense. Money laundering maybe.

>>21129988
I don't follow.

>> No.21130182

>>21130142
I was thinking this too. Some exploit of how Aave deals with liquidations. I don't know of the specifics of Aave enough right now, maybe I'll need to dig into that.

>> No.21130195

>>21130072
Maybe using 22 million usd would push the price that much and you don't get 15 million worth of link

>> No.21130252

>>21129483
Gotta be money laundering right?

>> No.21130279

>>21130195
Something like this is another possibility though I feel like $22m wouldn't have that much impact.

To me it seems like this is either:

-Money laundering
-Some kind of exploit of Aave or its liquidation process
-An OTC sale/short and they've just hidden the tracks well.

>> No.21130306

>>21130142
>>21130182
If it is to deal with liquidations, why borrow so much more link than is at risk of being margin called?

>> No.21130315

wonder what aave would make of it

>> No.21130334

>>21130306
It doesn't make sense to me that they would borrow LINK to cover their own ass in case of liquidation. I don't see what that would accomplish. It could be some kind of exploit of Aave and their liquidation process though I suppose.

>> No.21130379

>>21130182
https://docs.aave.com/risk/asset-risk/risk-parameters

The liq treshold, loan to collateral ratio and the bonus for liquidator depend on the type of collateral. If you wanted to pull off this type of heist, USDC has the best profile for it.

>> No.21130488

>>21130154
Yeah but why would you short link lmao

>> No.21130503

>>21130306
What makes you think they only used the first 350k to short?
What if they had another source of Link they used to short, for example from their own lending platform?
Wouldn't it be a bit too risky to risk losing all the Link you got from your customers, and risk destroying your own platform's reputation?
This may even work out better than expected and kill decentralized concurrents while making you look like you are better at managing funds than a automated process.

>> No.21130558

>>21130503
I dont see how this would kill Aave, unless they've spotted some exploit that I haven't.

Maybe they are indeed selling user deposits, but also borrowing on Aave as a sort of stop loss. That could make sense. It would be an expensive stop loss though as they'd pay the 10% liquidation fee.

>> No.21130567

>>21130503
Okay but play it out.. let's say they use this link to cover previous short positions getting liq'd... then what? Now they have this second short position and no link to cover it. They don't need this safety net if the short works out & price crashes, but if the price keeps going up, they are fucked whether it's their original short or this weird second short

>> No.21130623

>>21130334
USDC has loan to value ratio of 80%, liq treshold of 85% and liq bonus of 5%, so if I get this right, the liquidator would only be incentivized to liquidate if the price stays within 20% of the liquidation price. Any higher than that and its not worth it. The price of link could just shoot past that zone in case of that short squeeze. Not sure if I understand the Aave liq mechanic correctly though.

>> No.21130663

>>21130195
After reading all this, this makes the most sense and seems like the most logical explanation. I think $22m would cause a pretty big jump

>> No.21130699

>>21130663
I'm not sure. LINK's average daily volume is $1b. A lot of that is wash trades no doubt but still.

>> No.21130732

>>21130699
probably 80%+
as per every other top 10 coin

>> No.21130780

>>21130558
AAVE is built on blind trust of an automated system.
If it was enough to trust a system to make it work, Chainlink would not exist.

You have to keep in mind that these people are either degenerate gamblers or psychopaths.
They may have long gone past the point of no return, and are trying to reduce the damage when things happen.

>>21130567
They don't have a second short position.
They shorted 1.6m Link and are afraid of a short squeeze happening.
If they get liquidated they will lose the asset put as collateral on AAVE and Binance, but will keep their original Link amount and will be able to give it back to their customers even if the price increases too much.
Another possibility would be that they plan to use this 1.6m Link stack to close their short position on binance if the price goes up to protect the assets they have on it.

I don't know what happens when Binance liquidates your short worth a few millions and it costs more than your collateral.

>> No.21130835

Using link borrowed from AAVE to close a short on Binance would reduce the risk of causing extreme price movements when you have to buy back what you sold.
This way they could slowly buy back the shorted Link over weeks or month until they can give back the borrowed amount to AAVE.

>> No.21130866

>>21130835
sounds like we going to have some good APY on aave bois

>> No.21130933

>>21130732
Even still, $22m is just 10% of a days volume. They could buy it over 5 days and not have a huge impact. Certainly less than 35%.

>>21130780
They've shorted 350k on Aave.

They may have shorted more on other avenues like binance or quietly selling user deposits.

It could be essentially a stop loss as you say.

>> No.21131085

>>21130933
There is another possibility.
Most banks in the world are bankrupt, but can hide this by borrowing funds and paying to borrow money without having to repay the debt.
They are trying to buy some time until they are officially bankrupted, or they find a way to get miraculously money to cover their losses.

Let's say this 1.6m is used to repay all the Link used to short and they can't buy it back because they lost too much.
All they would have to do is to pay the borrowing costs to AAVE until they do an exit scam or manage to stay alive long enough to win their money back on another short/long attempt of another crypto.

>> No.21131207

im curious what if they borrow link and do not have the intention of paying it back, where will aave get the link back and will there be people that is willing to use their link to liquidate them?

>> No.21131246

>>21131207
that's how liquidations work on aave

individuals buy LINk or use existing LINK holdings to liquidate them and receive the USDC equal to the value of LINK they use, plus a 10% bonus

A potential issue is if LINK rises so rapidly that the LTV jumps from 70% to 100%

>> No.21131316

>>21130195

I said this days ago and I was laughed at. It’s not necessarily THE explanation but it is definitely a plausible one.

A large transaction like that by someone who isn’t connected could do the math and he/they may not have been able to acquire that amount of LINK purchasing by normal methods (due to price increase).

It is a little fucked up that some entities would borrow large amounts of LINK intending to default and never return it however, but that is the one “exploit” available on AAVE.

Don’t put your whole stack in LINKies!

>> No.21131673

>>21131246
>>21131316
what happen if there isnt enough liquidity to liquidate them. They get to keep the link while its going parabolic and aave is stuck with a 22mil stable coin.