- Curve Finance’s native token, CRV, experienced a sharp decline, impacting bullish investors and the platform’s founder, Michael Egorov.
- Egorov’s liquidation across multiple protocols signifies the volatility in the DeFi market.
- Arkham’s blockchain analysis revealed the scope of the financial hit faced by Egorov and the platform.
A sudden drop in CRV’s value leads to significant liquidations for Curve Finance’s founder, showcasing the inherent risks in DeFi lending.
Curve Finance’s Egorov Faces Massive Liquidations
Blockchain analytics firm Arkham confirmed on social media platform X (formerly Twitter) that Egorov’s substantial lending positions were liquidated as CRV’s value fell below critical thresholds across five different lending protocols.
Egorov incurred significant losses, including over a million dollars in bad debt on Curve’s own Llamalend, which was partially mitigated by a $6 million USDT infusion. Additionally, he saw a $5 million liquidation on UwU Lend and made repayments on Inverse to avert further financial damage.
Breaking the Bad Debt
Saint Rat, a contributor to Curve, announced that the protocol had accumulated $11.5 million in bad debt, which could potentially be resolved if CRV’s price rises to $0.33. Egorov committed to collaborating with the Curve Finance team to address the debt, emphasizing user protection.
Proposal to Burn 10% of CRV Tokens
In an effort to stabilize CRV’s price, Egorov suggested burning 10% of the CRV supply. He also offered active voters a three-month deposit reward boost across Curve’s platforms, aiming to bolster participation and ecosystem stability. Egorov commented:
The Curve Finance team and I have been working to address today’s liquidation risk. My large loan positions led to liquidity issues, causing $10 million in bad debt. I’ve repaid 93% so far and plan to repay the remaining soon to shield users from adverse effects.
This isn’t the first time Egorov has faced major liquidations. Last year, he borrowed $60 million from Aave, risking potential bad debt. To mitigate this, risk management firm Gauntlet suggested freezing Aave’s v2 CRV market. Subsequently, Egorov sold 106 million CRV in a private deal to repay his debts, including an $11 million USDT deposit to Aave in September.
Before this recent market downturn, CRV was trading at $0.3582. However, the token saw a nearly 40% drop to an all-time low of $0.2220 before recovering to $0.2880, representing a 22% reduction in the 24-hour losses.
Conclusion
The recent liquidation of Egorov’s positions highlights the inherent risks within DeFi lending platforms. Despite the recovery in CRV’s price, this incident underscores the importance of robust risk management and strategic financial planning in the volatile crypto landscape.
