The price of the second-largest cryptocurrency by market capitalization, Ethereum ($ETH) dropping below the $2,100 mark could lead to $500 million in liquidations as the Maker protocol would move to liquidate a whale to maintain DAI’s peg to the U.S. dollar.

According to The Block, if the price of ETH drops below that mark a Maker vault holder’s position will become under-collateralized and trigger the $500 million in liquidations, leading to further downward pressure on the price of the cryptocurrency.

The price of bitcoin ($BTC) and most other cryptocurrencies has plunged nearly 10% over the last 24 hours after Russian President Vladimir Putin announced a “special military operation” against Ukraine in what appears to be a full-scale invasion of the country.

In a televised speech, President Putin warned the United States and NATO against getting involved, saying that anyone who “tries to interfere with us, or even more so, to create threats for our country and our people, must know that Russia’s response will be immediate and will lead you to such consequences as you have never before experienced in your history.”

The Maker Vault holder, called “7-Siblings,” could see multiple debt positions worth $500 million in Ethereum liquidated if the price drops. The user, the news outlet reports, has escaped a $600 million liquidation in the past.

Maker’s DAI stablecoin is backed by cryptocurrencies like ETH. When an investor deposits ETH to a vault they get DAI in returns, and because of the volatile cryptocurrency market positions must be overcollateralized. To mint $100 in DAI, a user may have to put up as much as $170 in cryptoassets as collateral.

While this overcollateralization protects against sharp cryptoasset price movements, Russia’s invasion has triggered a wider sell-off. 7-Siblings being liquidated would likely end up triggering a cascade of liquidations as the price of ETH drops and other positions become undercollateralized. Ethereum is currently trading at $2,440.

The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.

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