Opinion: The source of this large-scale liquidation may be the "USDE arbitrageur's loop lending position forced liquidation."

On October 11th, Vida, the founder of Formula News, posted on social media, stating: "Some time ago, a friend told me that there is currently a risk-free arbitrage opportunity. That is to conduct USDE flash loans on Binance, with an annual interest rate of around 26%. His institutional friend turned 1 billion USDT capital into 5 billion USDE through flash loans on the Binance trading platform." Vida explained that this large-scale liquidation event was speculated to have occurred in a situation where the market with low liquidity dropped significantly: · The position of the USDE flash loaner was liquidated. · Leading to a low USDE price. · Causing a decrease in the collateralization capacity of USDE as the unified account collateral. · Triggering more liquidation of the positions of market makers collateralized with USDE. · Triggering the liquidation threshold of assets such as BNSOL and WBETH, which are accumulated yield assets. Assets like BNSOL and WBETH, although having a high collateralization ratio, have their value completely determined by the order book. Under the conditions at that time, no one went to provide support to maintain the peg, resulting in a price collapse and further liquidations. It can be guessed that most likely some market makers with unified accounts were also liquidated, which is why many small coins experienced extremely volatile prices.