A mere 3% price shift triggered a $36 million liquidation cascade in Ethereum DeFi, as one wallet’s heavy bet on a yield token crashed the paired principal token’s value — triggering a domino effect for leveraged borrowers who’d stacked PT-reUSD collateral to borrow USDC, then used those funds to buy more PT-reUSD. With less than 3% buffer against liquidation, their positions collapsed when prices dipped. Pendle says its price feed worked as designed, and lenders saw no losses or bad debt — but it’s a chilling case study in how high-leverage DeFi strategies, built on volatile assets with razor-thin margins, can unravel in seconds.
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