February saw ether lending markets experience their most significant liquidation event in 12 months, with nearly half a billion dollars in collateral being liquidated. This represents the second-highest monthly liquidation figure in DeFi history, trailing only the May 2021 market crash when liquidations reached $670 billion.

Unsurprisingly, the surge in liquidations coincided with the broader market decline that saw total crypto market capitalization drop considerably, triggering a cascade of forced position closures.

The bulk of these liquidations occurred on the two largest lending platforms, Aave and Compound, which together processed the majority of February's liquidation volume. The platform's liquidation mechanism allows third-party liquidators to repay portions of underwater loans and receive the borrower's collateral at a discount, typically in a range between 5% and 15%, depending on the asset, creating a financial incentive for efficient market correction.

Looking at the collateral composition on Aave provides insight into what assets were likely affected. The platform currently shows a significant supply of ether (2.06 million ETH, worth $5.09 billion), USDT (3.56 billion USDT), and various wrapped tokens, including wstETH, WBTC, and weETH, alongside 3 billion in USDC. These large collateral pools represent the primary assets that borrowers use to secure their loans, and when market values declined sharply, many positions crossed their liquidation thresholds.

While lending protocols are designed to handle liquidations through automated processes, the scale of February's event highlights how quickly market conditions can deteriorate when broader sentiment shifts. For borrowers, this underscores the importance of maintaining healthy collateralization ratios with adequate buffers to withstand market downturns.

Despite the significant liquidation volume, major lending platforms have demonstrated resilience, functioning as designed even under stress. This operational stability represents an important maturation point for DeFi infrastructure, showing that these protocols can process large-scale deleveraging events without systemic failure.

(Note: The liquidation figures reported in our articles are based on publicly available data, which may understate the true extent of market liquidations. In many cases, API limits and incomplete reporting practices result in only a fraction of actual liquidation activity being captured by data aggregators.)

As the price of BTC and ETH fell by over 18% and 26% at their respective lowest points, Bybit saw a record amount of long liquidations, totalling over $1.4 billion for the week. From this, the largest single-day figure came on Feb. 25, 2025, with over $383 million in long liquidations. These represent Bybit’s largest-ever single-day and weekly liquidation figures.

It is worth noting that the reason for Bybit’s heightened liquidation figures goes beyond prices going down, as they are currently the only notable centralized exchange (CEX) to disclose their liquidation data fully. For context, current publicly displayed liquidation figures on most CEXs are inaccurate and underreported due to API rate limitations, as real liquidation figures can generally be at least 4 times larger than what is reported.

Last month, Bybit announced it would begin to disclose its real liquidation data. As the price of BTC fell drastically this past week, we are now seeing the result of Bybit’s fully transparent data, hence the comparatively heightened figures. This is further evidenced by the fact that long liquidation figures on other notable CEXs such as Binance, OKX and Huobi were relatively modest and in line with their previous averages last week.

Meanwhile, open interest (OI) for bitcoin and ether futures on Bybit and CME also experienced a significant decline last week. OI on BTC futures on Bybit decreased by over 35% in roughly a week, from $8.5 billion on Feb. 21 to $5.45 billion by March 1. CME painted a similar picture, decreasing by over 23% in the same period, from $16.93 billion to $12.96 billion in OI on BTC futures.

On the other hand, over 41% of OI on ETH futures on Bybit were closed in this period, falling from $3.07 billion to $1.81 billion. Meanwhile, CME saw its OI on ETH futures decrease by over 30%, from $3.2 billion to $2.2 billion.

This is an excerpt from The Block's Data & Insights newsletter. Dig into the numbers making up the industry's most thought-provoking trends.

Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.

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