Liquidations, Sandwiches, Insolvency: Three Arrows Shooting Down 3AC?
CORRECTION: according to this tweet from Larry Cermak, the VP of Research at The Block. The 3AC tag of the address ended with f80e has been removed by Nansen. More updates will follow.
The cascading freezing effect of the market crash has extended to one of the most active investment firms: Three Arrows Capita, known as 3AC. On Wednesday, 49 forced liquidations, leading to being the victim of sandwich arbitrages due to assets sell-out to avoid future liquidations and potentially resulting insolvency, put the company’s future into question.
Over $100M Liquidation
According to EigenPhi’s Liquidated Borrowers leaderboard, during the last few days, these two addresses belonging to 3AC have suffered 49 liquidations with a total amount of over $100M.
Helping you to put that into perspective, EigenPhi’s data shows that the overall liquidation amount of the same period is about $251M, which means 3AC’s asset sale accounted for 40% of the total.
Who’s benefit from the auctions? Check out the No.1 liquidator’s detail page, and you can find at the bottom its connection to the two 3AC addresses: a total of 8 liquidations over $29M.
The biggest profit of this liquidator is also out of the pocket of 3AC.
Click the row above, and you can examine the details below.
You will find the same pattern among other top liquidations as well and expect more to come. Why? Take a look at the addresses’ portfolio on Zapper.
As of writing, June 15, 10:04 AM EDT, the net worth of the address ends with f80e is $57M while its debt is $184M.
The other address’s net worth is $6.88M with a debt of $19M.
3AC's future is bleak, to put it mildly.
6 Not-So-Delicious Sandwiches
Facing such urgency, all the investment firms would do the same thing as 3AC: strengthen its position, even at discount prices. For example, it swapped 30,000 stETH for 28,340 ETH via this transaction.
But, on the open blockchain, it’s easier to forget who’s lurking around when you are in a hurry.
Both addresses above have become victims of Sandwich attacks during the last 2 days. The specifics are as follows.
Open https://eigenphi.io/ and paste the address in the search box. You will be directed to the victim pages of them. Take the address f80e’s victimization, for example. We can tell it had suffered 2 attacks with the loss of $11K.
The two attacks are listed below.
How did the attack happen? Click the arbitrage address, and there you go.
Victim f80e tried to sell 1,700 WETH for USDT and became the recipe of a sandwich employing over $1M worth of assets.
You can also examine the address e9ae’s victim history here.
Under similar onslaughts, the 2 addresses eventually suffered a total loss of $24K.
Of course, this loss means nothing compared to the possible insolvency 3AC is facing.
Insolvency for real?
Having 212K $WETH in AAVE is keeping 3AC safe for now. Its Health Factor is 1.08.
However, if the price of ETH keeps dropping and reaches about $1,018, according to DeFi Analyst @DeFiyst, everything will crash for 3AC. Considering the systematic risks combined with the status of Celsius, that is definitely not the result we want to see.