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Celsius Pays Off Maker Loan, Freeing Up $440M of Collateral


www.coindesk.com 07 July 2022 13:50, UTC
Reading time: ~2 m

Celsius, the crypto lender that halted user withdrawals last month because of liquidity pressures, reclaimed $440 million of collateral on Thursday after fully paying off a loan on Maker, one of the largest decentralized finance (DeFi) protocols.

On-chain data shows that a wallet linked to Celsius repaid the remaining $41.2 million of the loan in DAI, the Maker protocol's stablecoin. That prompted the Maker protocol to release 21,962 wrapped bitcoin (WBTC), a bitcoin-equivalent token of the Ethereum blockchain, which was pledged as collateral of the loan. That works out to about $448 million, since WBTC is currently trading around $20,400.

The move means a big liquidity boost for the beleaguered crypto lender's finances. Celsius halted all customer withdrawals and transactions on June 12 to avoid a run on deposits.

Fundstrat analyst Walter Teng told CoinDesk earlier this week that the collateral that Celsius freed up "can be sold on centralized exchanges or via over-the-counter to meet creditor demands and customer withdrawals."

CEL, the native token of the Celsius platform, spiked 10% within minutes after the news, but it is still down 81% since the start of the year.

Celsius slowly started to reduce its debt to the Maker protocol earlier this month, paying back $224 million altogether through the last seven days.

The loans on decentralized lending platforms such as Maker are generally overcollateralized, meaning that the borrower has to put up more assets in value as a backing of the loan than the value of the loan itself. Repaying the loan made sense for Celsius because it could get a grip of the valuable collateral by paying back a fraction of its value.

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