How Ethereum’s $600 mln whale exit exposed its DeFi’s hidden fragility

Key Points

1. Justin Sun's $600 million ETH withdrawal from Aave drained ETH reserves, causing variable borrow rates to surge above 10.06%.

2. The liquidity shock forced leveraged traders (loopers) to unwind stETH-ETH positions, flooding the market with stETH and increasing sell pressure.

3. The event revealed Ethereum's DeFi stack is less decentralized than perceived, with systemic fragility under large-scale withdrawals.

4. The sell-off led to $150 million in long liquidations and stalled Ethereum's rally near $2,860, highlighting market volatility and thin liquidity.

5. The incident underscores how concentrated actions by large holders can destabilize DeFi protocols and broader ETH price momentum.