The Ethereum Foundation has denied that a wallet under its control was nearly liquidated.

Earlier today, crypto traders spotted an unusual transfer of 30,098 ether (ETH) from a suspected Ethereum Foundation address into Maker, a stablecoin-focused crypto lender.

Crypto traders noticed an unusual transfer of 30,098 ether (ETH) early today from a suspected Ethereum Foundation address into Maker, a stablecoin-focused crypto lender.

Glancing at the figures, speculators quickly guessed the reason for the $56 million deposit was an emergency collateralization to prevent an embarrassing, expensive liquidation.

However, Protos reached out to the Ethereum Foundation for comment and was told by a spokesperson that the wallet involved in this transaction was not controlled by the organization.

ETH has halved in the past year and declined 27% in the past 30 days, dipping 4% in the last 24 hours alone. As its price continues to crash, the likelihood of liquidating ETH as a depreciating unit of collateral increases.

Last month, in response to widespread criticism of the Ethereum Foundation’s governance, Vitalik Buterin replaced its leadership and approved its first-ever deposits into three yield-generating protocols: Aave, Compound, and Spark, a Maker-focused lender.

As a result, these changes introduced collateralization requirements as a new risk to the Ethereum Foundation’s considerable assets. For context, the Ethereum Foundation holds hundreds of millions of dollars in ETH that it slowly sells to pay for grants, events, academic research, and other community development programs.

That vault requires a collateralization ratio of approximately 241%. Again, a spokesperson for the Ethereum Foundation denies that they control this wallet or have exposure to any such liquidation thresholds.

Buterin seeded the non-profit with free coins from the initial coin offering (ICO) of Ethereum itself.

Liquidations in play with ETH down 50% in a year

Although the foundation is not taking out loans itself, its ETH supplies liquidity and earns fees from traders and borrowers who are becoming increasingly less creditworthy amid the recent crypto bear market. In finance, there’s no such thing as a free lunch and there are no passive, risk-free revenue streams.

Historically, the Ethereum Foundation held its ETH passively. However, as of its February leadership and investment overhaul, it’s depositing its ETH into riskier protocols like the Maker ecosystem’s Spark.

The current liquidation price for Maker’s “ETH-A Vault” address relevant to a suspected wallet belonging to the Ethereum Foundation is $1,127.23 per ETH — almost 40% below ETH’s current market price.

That vault requires a collateralization ratio of approximately 241%.

Although seemingly far away from a liquidation, even a momentary “flash crash” wick below a liquidation price is enough to trigger a catastrophic loss for anyone involved in decentralized lending. With no customer service or courtesy of a 24-48 hour margin call, on-chain liquidations are brutally mathematical and simply sweep collateral to market-makers even if prices recover a few minutes later.

Read more: What is MicroStrategy’s bitcoin liquidation price?

Only speculation, no assurance of Ethereum Foundation involvement

Today, a rumored deposit from The Ethereum Foundation lowered the liquidation threshold for a Maker holding worth approximately $182 million.

So far, the identity of the entity or persons who added collateral into Maker remains the subject of speculation. One critic believes that Arkham and other people on social media have mislabeled that address as belonging to the Ethereum Foundation, for example.

The wallet could be a co-founder or early insider who received ETH from the ICO.

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