Catenaa, Wednesday, February 11, 2026-A large loan backed by about 2.3% of AAVE’s total token supply began liquidating in multiple tranches Thursday as a broad crypto market selloff pushed the token sharply lower, according to onchain data.
About $2 million in AAVE collateral was seized across four liquidation events to cover nearly $2 million in outstanding USDC debt.
The position had been heavily collateralized before prices fell, with roughly $28.4 million in AAVE posted against the loan on the Aave decentralized lending protocol.
The borrower used 355,093 AAVE tokens as collateral. As AAVE dropped to near $104, three rapid liquidations were triggered, repaying part of the debt while transferring collateral to liquidators. A further decline to about $103 set off another liquidation worth roughly $1.38 million, seizing close to $1.47 million in AAVE.
AAVE later traded around $105.60, down about 15% on the day, according to market data. The move came as bitcoin and ether both fell more than 13%, dragging many digital assets to multi-month lows and amplifying stress across decentralized finance positions.
Loans on Aave become eligible for liquidation when their health factor falls below 1, typically due to price declines or interest accrual.
Liquidators can repay part of a loan in exchange for collateral at a discount, while the protocol limits liquidations to amounts needed to restore safer levels.
The loan now shows a collateral ratio near 132% and a health factor close to 1. The borrower first deposited AAVE in 2024 and expanded borrowing activity in 2025 with larger, repeated loans. Market speculation linked the position to Aave’s founder, which he publicly denied.
