Spark's Chief Strategy Officer: The spillover effects of the rsETH security incident have exacerbated the DeFi market's potential cascading liquidation crisis.

CoinFeed reported on April 19th that monetsupply.eth, the lead strategist at Spark Protocol, stated on the X platform that as liquidity in the stablecoin market tightens, the current rsETH security incident may be entering a more dangerous phase. Approximately 16.5% of the ETH market is supported by rsETH. If the losses are evenly distributed across the mainnet and cross-chain environments, rsETH collateralized loans may face a 10%-15% discount under eMode. Furthermore, after the risk buffer is exhausted, ETH depositors may still bear a remaining 2%-3% loss. Under this expectation, ETH providers tend to exit as quickly as possible, resulting in market utilization being locked at 100%. Meanwhile, borrowing rates are insufficient to incentivize cyclical leveraged positions such as wstETH and weETH to actively deleverage and release liquidity.