Lista DAO's vaults managed by MEV Capital and Re7 Labs underwent forced liquidation due to spiking borrowing rates, significantly impacting the DeFi market on November 6, 2025.
This event highlights potential instability in DeFi systems, triggering governance votes and affecting stablecoin markets with potential ripple effects in broader cryptocurrency ecosystems.
Forced Liquidation Triggered by 99% Vault Utilization
Lista DAO's vaults managed by MEV Capital and Re7 Labs faced forced liquidation as vault utilization touched 99%, prompting the organization to hold an emergency governance vote amid surging borrowing rates. The situation became critical when borrowing rates in specified markets soared to 800%, leading Lista DAO to initiate forced liquidation through a governance vote supported by veLISTA token holders. A communicator from Lista DAO stated, "We are aware and have been closely monitoring the @MEVCapital USDT Vault and @Re7Labs USD1 Vault, where collateral assets ($sUSDX and $USDX) continue facing abnormally high borrowing rates without repayment activity."
800% Borrow Rates Impact Liquidity and Strategy
Market instability flooded borrowing areas as vault utilization increased sharply. Lista DAO's on-chain lending participants experienced sudden strategic redistributions, affecting liquidity flows broadly across related sectors. The imposed forced liquidation alarms the entire DeFi industry, emphasizing vital liquidity management and risk control mechanisms that could predictably respond to similar high-stakes credit scenarios. A public statement from @Re7Labs in their Discord detailed their proposed plan for asset handling the USDX market.
Past DeFi Crises Highlight Liquidity Risk
Comparably, past DeFi liquidations within platforms like Aave and Compound mirrored Lista DAO's current challenges during high-pressure periods, revealing systemic links between borrowing stimuli and forced repayment conditions. Given these conditions, emerging market strategies may include adjusted interest-rate models and stronger vault utilization constraints, advancing both risk aversion and stability across decentralized financial ecosystems. The allocation cap has been set to zero and the interest rate model updated for risk management by MEV Capital.