The Mystery of Three Arrows Capital

Three Arrows Capital is at the center of the puzzle, and rumors continue.

On June 15, ZhuSu, founder of Three Arrows Capital, tweeted that we are communicating with relevant parties and are committed to solving the problem.

What is the problem solved?

The block said that the total liquidation limit of Three Arrows Capital on lending platforms such as Deribit and BlockFi is as high as 400 million US dollars. Three Arrows is currently working on its relationship with lenders and other counterparties.

And with the fermentation of these news content, information is also spread from multiple sources.

1. In the past 24 hours, StarryNight, an NFT fund supported by Three Arrows Capital, has emptied all its 70 collectibles on the SuperRare platform. The fund has spent more than $21 million buying these NFTs since last August.

2. The wallet labeled Three Arrows Capital (3AC) on Nansen has been aggressively repaying AAVE’s debt to avoid liquidation of its 223,000 ETH position of approximately $264 million. This wallet borrows $198 million, with an 85% pledge rate, and ETH will be liquidated if it drops 11% to $1042.

3. The above liquidation price has now become $1016.

4. Three Arrows Capital once purchased 10.9 million $LUNC with USD 559.6 million, and then locked and pledged the 10.9 million $LUNC on the node to earn interest. 10.9 million $LUNC is now worth $660.

5. Three Arrows Capital has been selling coins and has sold nearly 8,000 ETHs in the past half hour.

6. According to Bitfinex data, Three Arrows Capital ranked second on Bitfinex’s monthly loss list in May, with a total loss of $31.37 million.

These multiple sources and scattered news have added a guess on Twitter: whether Three Arrows Capital is going to liquidate its positions.

Three Arrows Capital has been one of the most active capitals in the past bull market. It has participated in the Luna Foundation LFG and endorsed the Terra system with BTC reserves, and has built a large number of ETH positions in the past six months. Ethereum Challenger”.

Under the downward trend of the market, these actions are intensifying speculation about the situation of Sanjian.

Based on multiple sources of information, the key asset losses of Three Arrows Capital are due to GBTC, stETH and Luna.

According to public information, as of the end of 2020, Three Arrows Capital is the largest holder of Grayscale GBTC, holding 5.6168% of the GBTC share, and these positions have been severely shrunk due to the fall in currency prices and decoupling.

stETH is “de-anchoring” recently. The revolving loan model and the shortage of liquidity, stETH is exchanged for ETH, and its value is constantly depreciating. On-chain data shows that Sanjian is selling stETH through every account and seed investment address it owns.

LUNA (LUNC) has shrunk its original investment of $559.6 million to $660.

As for other “Ethereum challengers” that he has sung a lot about, such as Avalanche, Polkadot, etc., they have experienced a drop in half in the past 2 months.

To sum up, the conundrum of Three Arrows Capital is underway, and the degree of market stability may still deal a fatal blow to Three Arrows.

Yesterday, ETH fell to $1,070, which has not caused the liquidation price of Three Arrows Capital in AAVE mentioned above.

In today’s secondary market, the prices of BTC and ETH are already in danger. Under the panic, a drop in price or a quick pin-up may liquidate these loan assets.

ZhuSu, founder of Three Arrows Capital, has now simplified his Twitter signature, removed those projects that sang a lot, and deleted the content of Ins. Added more doubts to the outside world.

And we will not talk about these details, but only look at the market changes. I have to say that the currency price is in the downward range, and the price is falling to deleverage the industry.

In the cryptocurrency world, liquidity is established by a small number of assets in high-frequency trading, and leverage is bound to exist. The benefits provided by Defi such as lending are also continuously increasing the leverage ratio. These leverages show high yields in the process of currency prices rising, but in the process of currency prices falling, lending may hit the liquidation price. After liquidation, there will be a chain effect. In the end, an asset that is several times in value may fail to retain 50% of its original value after liquidation.

When those capitals that are in an upward trend or a stable trend start to face downward and chain effects, it may be the situation that Three Arrows Capital is facing now.

I can only hope that the three arrows will be fine in the end, because if the three arrows cannot support, it will inevitably cause short-term impact on the market and unpredictable long-term impact.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/the-mystery-of-three-arrows-capital/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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