Trend Research Unwinds $1B Aave Bet as Liquidation ‘Death Line’ Looms at $1,640
Trend Research (LD Capital) is frantically selling down a $1B leveraged ETH position on Aave, with a liquidation trigger now sitting dangerously close at $1,640.
The $1.6K Line in the Sand
One of the largest leveraged longs in DeFi history is frantically de-risking. Trend Research, a whale fund linked to LD Capital, is aggressively unwinding a massive Ethereum position on Aave to avoid a catastrophe that could crater the spot market. Following a week of forced selling, the fund’s liquidation threshold has tightened to a critical band between $1,576 and $1,682.
With Ethereum trading near $2,130, the market is roughly a 20% wick away from a triggered cascade. This isn’t theoretical: Trend Research currently holds 463,000 ETH (approx. $1 billion) against $625 million in stablecoin debt. If the price snaps the $1,640 support, Aave’s liquidation engine would be forced to dump hundreds of millions in ETH into an already illiquid order book.
The Great Unwind
The fund isn’t waiting for the market to decide its fate. On-chain data indicates a proactive, albeit desperate, retreat. Since February 1, Trend Research has sold approximately 188,500 ETH (notional value ~$426M) to pay down debt, realizing heavy losses to lower their liquidation price from the $1,800s.
The fund’s average cost basis sits near $3,180. Selling at $2,200 levels represents a brutal capitulation of hundreds of millions in equity to save the principal.
This aggressive repayment strategy has successfully pushed their health factor up slightly, but the sheer size of the remaining position acts as a gravity well on ETH price action. Every bounce is being sold into to reduce leverage.
Systemic Contagion Risk
DeFi lenders have handled stress before, but rarely on this scale. A $140 million liquidation wave earlier this week already strained liquidity; a $1 billion unwinding would be an order of magnitude larger. The fear is not just the price drop, but the bad debt insolvency risk for Aave if the price crashes faster than liquidators can sell. For now, the market watches the $1,640 level. If that breaks, the “on-chain 3AC” narrative becomes a reality.
