Total Losses Positions

Overview

This indicator tracks the aggregated losses weighted by the value of their debt due to soft liquidations across all supplied collateral in a given market. This provides an overview of the overall health of a collateral market and the potential crvUSD supply shock that could ensue if substantial losses in a market led to hard liquidations or large loan repayments.

How can I use it?

As a strong leading signal prior to large liquidation events, users can track the health of the collateral market to identify when increased volatility in crvUSD supply might occur. For users that are operating positions with a low health factor, increases in total losses in positions can help the user manage their position to prevent being liquidated in the case of a cascading liquidation event.

For users in LP positions, monitoring upcoming large liquidation events can help manage their risk of exiting a crvUSD market at a moment where liquidators are buying large amounts of crvUSD of the market to liquidate positions and therefore potentially imbalancing the pools. If an LP decides to exit their position during events such as this, they are likely to expose themselves to increased slippage in the market and potential capital loss.

In the example chart above for wstETH, the Total Losses Positions indicator is showing an increase in losses from mid-October through December with no recovery. By mid-December there is a large increase in losses followed by a sharp decrease in the total losses percentage from 4% to under 1%. This large change in losses was due to $11M+ in liquidations on December 18, 2023. In this scenario, this chart provided applicable risk information multiple days before the large liquidation event, giving users time to address any potential economic risks they could face.