⌞ Bull Market, I Got Liquidated ⌝

I woke up this morning and checked my phone, saw SOL soaring 10%, my first reaction was awesome, the second glance at my borrowing position made me feel something was off, so I quickly got out of bed and turned on my computer at 6 AM.

I was using USDC as collateral in my wallet to borrow SOL for interest, allowing me to earn 6.5% on stablecoins and 5.3% on SOL. I have been managing my finances this way recently.

I had 87,000 stablecoins in my account, but this morning when I opened the wallet homepage, it showed only 70,000, which immediately made me sweat; I was really sweating profusely, and then I quickly checked the details of the loan liquidation. I was liquidated over three pages of A4 paper!

🥶 I was really shocked, my mind hadn't even fully woken up yet, and I was buzzing with fear. Did I lose 17,000 USD in a bull market???

The system showed that my stablecoins were liquidated to buy SOL to repay the loan, liquidating 19,200 USD. My world crumbled.

I quickly transferred SOL from my sub-account to repay the loan, suddenly realizing that my sub-account had 430 SOL, while my main account's loan was -330 SOL. Although it was liquidated, it was equivalent to repaying the loan early. Now if I repay, I would have an extra 100 SOL in my balance.

😅 Luckily, brothers, I was really lucky. I hurriedly sold the SOL to convert back to stablecoins, not daring to delay for a moment; the price was slightly lower than the liquidation price, resulting in almost no actual loss.

✅ My Lessons and Thoughts

However, this incident gave me a deeper understanding of risk. I want to remind everyone that when using leverage in any on-chain DeFi, you must be an actuary and estimate risks in advance!

🔸 For example, in lending, if I borrow SOL using stablecoins, if SOL continues to plummet, I won't have any liquidation risk. But if it surges, it will trigger the situation where USDC collateral is used to forcibly buy SOL to repay the loan.

🔹 For instance, in spot/contract hedging, paying funding fees for the price difference, everyone must pay attention: a surge will affect ⌞ Maintenance Margin Rate ⌝. Once it exceeds 100%, it will trigger liquidation, and then your position will no longer be balanced and hedged; you'll be in a naked long/short position, which becomes very dangerous during significant market fluctuations.

On-chain finance, especially when leveraging, can bring high returns, but brothers must keep track of the numbers and pay attention to risks.

I hope brothers can learn lessons from my story.

Remember, remember!