Pike
@pikefinance
Want to make money in DeFi beyond just holding tokens? Discover the exciting world of liquidations - a chance to profit while keeping lending platforms running smoothly. Let’s dive in! (1/7)🧵
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Pike
@pikefinance
2/ In DeFi lending, borrowers deposit more collateral than they borrow (over-collateralization). If the collateral’s value drops too much, the loan can be liquidated. That’s where you come in. As a liquidator, you repay part of the debt and claim collateral at a discount.
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Pike
@pikefinance
3/ How to Profit? • Be a Liquidator: Spot loans with health factor < 1, repay part of the debt, grab collateral at a discount. • Lend Assets: Earn stable interest as liquidators keep platforms safe. Liquidating is where the action’s at fast!
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Pike
@pikefinance
4/ Example on Aave V3 Ethereum • Borrower: 10 ETH collateral ($30k), borrows $15k USDC. • ETH crashes to $1,807, loan’s at risk. • Liquidator repays 2.5 ETH of debt, claims 2.625 ETH at 5% discount. • Sells for $226 profit!
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Pike
@pikefinance
5/ Risks to watch: • Market swings can erode profits. • High gas fees (esp. Ethereum) cut into earnings. • Speedy competitors might beat you. • Platform-specific rules & rare smart contract risks.
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Pike
@pikefinance
6/ Learn the basics of a platform like Aave or Pike, use on-chain tools to spot opportunities, start small, and act fast. Liquidations are a race against time! Dive into the full blog here - https://community.pike.finance/profit-from-defi-lending-liquidation
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Pike
@pikefinance
7/ *This educational content prepared by community members is for educational purposes only and not financial advice. If you spot any inaccuracies, let us know!
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