In the midst of a worldwide market slump, Ethereum (ETH), the second-largest cryptocurrency by market value, has seen more downward pressure. ETH fell below $1,800, a 53% decline from its December peak, after hitting a mid-December high of $4,107, which was still below its all-time high of $4,868 in November 2021. However, a fresh on-chain development has briefly taken center stage as traders rush to gauge the severity of the current drop.
The Ethereum Foundation, Is That Correct?
Lookonchain, an on-chain analytics tool, highlighted concerns this week about a transaction that may indicate a liquidation risk for the Ethereum Foundation (EF). A wallet believed to be belonging to the Ethereum Foundation sent Maker $30,098 ETH ($56.08M) five hours ago in order to lower the liquidation price, according to a report from Lookonchain via X. At the moment, this wallet contains 100,394 Ethereum ($182M) on Maker, with a $1,127.06 liquidation price.
There was a lot of conjecture on EF’s possible exposure due to the size of the transaction, which was reportedly valued at $56.08 million in ETH deposits. According to Lookonchain’s data, a MakerDAO vault with a liquidation threshold of about $1,127—a crucial figure considering ETH’s recent price collapse—was backed with 30,098 ETH, or over $182 million.
Wu Blockchain, a Chinese cryptocurrency news source, was one of the first to report on the story. But soon after, Wu Blockchain provided an explanation based on Arkham Intelligence analytics.
The wallet’s ties to the Ethereum Foundation might have been exaggerated, according to the revised analysis. It seems that the address is that of an early Ethereum investor who used to deal with EF’s official wallets but has since moved on to handle money on their own. During a market slump, the deposit of 30,098 ETH was most likely a calculated effort to strengthen collateral and reduce the MakerDAO vault’s liquidation price.
On-chain data reveals that the Ethereum Foundation address is not the same. Despite receiving a 4M DAI transfer from the Ethereum Foundation ETH Sale in May 2022, this address is more likely to have been an early ETH investor than the Foundation itself, as evidenced by its transaction history and initial ETH investment being traced back to jonny.eth (0xb76). This address has a debt position of 78,035,224.7182 DAI and put 30,098 ETH into the MakerDAO vault today.
There is presently no formal proof connecting the vault to the Ethereum Foundation, even if the liquidation price is still at $1,127, a figure that some analysts think might be tested if market pressures continue. Consequently, considering the explanations provided by Wu Blockchain based on Arkham facts, it appears that speculations about an EF liquidation are baseless.
FAQ
No, there is no confirmed evidence linking the MakerDAO vault in question to the Ethereum Foundation. The transaction appears to have been carried out by an early Ethereum investor rather than the EF itself.
The deposit was likely a strategic move to strengthen collateral and lower the liquidation price, reducing the risk of liquidation amid market downturns.
This is the threshold at which the MakerDAO vault could be liquidated. If Ethereum’s price falls below this level, the collateralized ETH could be sold off to cover the debt.
How did the rumors about the Ethereum Foundation’s involvement start?
On-chain analytics from Lookonchain initially suggested a link between the wallet and the Ethereum Foundation. However, further analysis by Arkham Intelligence indicated that the wallet likely belongs to an early ETH investor, not EF.
Based on current data, there is no direct risk to the Ethereum Foundation. However, market conditions and ETH’s price movement should still be monitored closely.
