Justin Sun, the encrypted billionaire and the creator of Tron Blockchain, attracted the attention of the encryption community to a major issue in ETHEREUM, which he sees as a threat to its near future.
Sun addresses the issue of lifting Ethereum
Justin Sun believes ETHEREUM faces a big problem of high financial leverage that merchants use when they make operations with ETH on both central and decentralized platforms. Tron founder tweeting that this problem is likely to explode in the short term and “causes losses in Protocols and Defi projects” on the Ethereum network.
Sun urged Ethereum to address this problem in an earlier stage and “solve some leverage” instead of waiting until the problem reaches its peak and explodes, harming Ethereum Defi users.
“It is recommended to resolve negotiations,” he said.
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Financial use on Ethereum expands quickly
The case mentioned by Justin Sun indicates the fact that the excessive financial lever in ETH trading may increase recently. Especially since it can be seen in the derived markets, such as options and permanent future contracts. Many merchants were increasingly using up to 50x (sometimes up to 100x) the financial lever when the ETH trading on large platforms. This leads to excessive risk of references when prices fluctuate.
Another factor that enhances this problem is widely used as a guarantee in the ETHEREM -based Defi protocols. The high financial lever here means that a sudden decrease in the price of the ETH may cause the mass to liquidate the loans, which will enhance the declining pressure in the market.
Also, when the leverage becomes very high, this may lead to high financing rates, and in return it can push traders to start an eth shortcut. This is likely to cause market corrections.
The commentator responded to the Sun’s publication, sharing the data that from today, the ETHEREM 5-10X crane is $ 50 billion in exposure, which represents approximately 11 to 14 % of the 440 billion market value. This may pose great risks because daily filtering sizes have already increased to 50 to 70 million dollars, indicating active trading based on leverage.
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The perpetration of Ethereum committing after a 15 % collapse
Over the past 24 hours, the second largest ETHEREUM coin has shattered by 15 %, decreasing to $ 1811 earlier today. However, so far, ETH has increased by 6 %, as it is a little close to its losses and is currently being traded at $ 1920 for the coin.
The ethereum here reflected the Bitcoin drop to a level below $ 80,000 on Monday and the height that followed.
