- FUD has been circulating that a BNB liquidation event led Binance to sell off Bitcoin.
- Binance’s CEO dismissed the claims, saying the $30M sale has negligible impact on BTC.
- A crypto analyst argues the liquidation event is unlikely.
In a recent tweet, crypto analyst zkHopium addressed the concerns surrounding a BNB liquidation event on the Venus Protocol. The concern is that the anticipated liquidation has caused Binance to sell off Bitcoin (BTC) to safeguard BNB’s value.
zkHopium’s detailed thread addressed the claims and dismissed them as FUD. The CEO of Binance, Changpeng Zhao expressed appreciation for the comprehensive research. Zhao argued the irrational nature of the FUD narrative that had gained traction.
Notably, the focus was on the potential impact of a $30 million sale on Bitcoin price. Zhao highlighted that $30 million represents less than 0.001% of the daily trading volume of BTC.
Meanwhile, zkHopium argued the genesis of the FUD narrative dates back to October 2022. It was particularly the time an exploit hit the Binance Smart Chain (BSC) ecosystem. During the incident, a hacker minted two million BNB.
According to the analyst, the scammer deposited around 900k BNB onto the Venus Protocol. Then, the hacker utilized the deposit to borrow and extract approximately $150 million worth of USDT and USDC.
However, in response, the BNB Chain community burned over two million BNB, roughly $550 million. Similarly, the Venus Protocol executed a governance proposal (VIP-79). The proposal approved BNB Chain as the sole liquidator for the exploited loan.
Also, BNB Chain funded the specified liquidator wallet with $30 million BUSD in December 2022 to facilitate the forthcoming liquidation process. The analyst further highlighted that it injected $30 million USDT in June 2023 with a similar value in August.
Notably, zkHopium mentioned that Venus Protocol’s liquidation mechanism involves a predetermined collateral. It implies that liquidators can liquidate up to 50% of the collateral upon limit while pocketing 10% in fees. Meanwhile, he estimated the impending liquidation threshold to be approximately $196 BNB price.
According to zkHopium, current developments indicate that the liquidator has repaid $60 million USDT. The repayment resulted in the liquidation of 296,583 BNB. The analyst concluded that the FUD around BNB liquidation lacked a fundamental basis.
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