As an analyst with a background in blockchain finance and experience in analyzing market events and their impact on key players, I believe that the recent sudden crash in Curve Finance’s native token CRV has resulted in significant losses for the platform’s founder, Michael Egorov. The reported liquidations totaling over $140 million are a stark reminder of the inherent risks involved in cryptocurrency trading and lending.
The unexpected and drastic plunge in Curve Finance’s native token CRV value caused significant financial setbacks for bullish investors and its founder, Michael Egorov. According to blockchain analysis firm Arkham, Egorov experienced liquidations amounting to approximately $140 million in CRV.
Curve Finance Founder Egorov Liquidated
On X’s social media platform, previously known as Twitter, Arkham announced that Egorov’s substantial loan, valued in the billions, was forcibly closed across five different lending protocols because the cost of CRV dipped below the established liquidation level.
Egorov racked up over a million dollars in bad debt on Curve’s Llamalend, which he subsequently paid off with a $6 million USDT infusion. Simultaneously, Egorov faced a $5 million liquidation on UwU Lend while making efforts to minimize losses by repaying Inverse.
As a researcher delving into the latest developments within the DeFi (Decentralized Finance) space, I came across an intriguing disclosure on June 13 by Curve contributor Saint Rat. The revelation indicated that the protocol had amassed approximately $11.5 million in bad debt. This predicament could potentially be remedied if the CRV token price surpassed the threshold of $0.33.
Proposal To Burn 10% Of CRV Tokens
During the crisis, Egorov proposed a solution involving the destruction of 10% of the entire CRV token supply in order to help regulate its price. Additionally, he declared that depositors who actively participate in voting would enjoy enhanced deposit rewards for a three-month period on all Curve platforms. The intention behind this move was to motivate more engagement and bolster the ecosystem.
The Curve Finance team and I have been diligently working to address the liquidation risk incident that unfolded today. Some of you may be familiar with the fact that a significant portion of my loans were liquidated due to the size of my positions exceeding the market’s capacity, resulting in approximately 10 million dollars in bad debt. The CRV market on lend.curve.fi was the most affected by this unfortunate event. I have already repaid 93% of the outstanding amount and plan to settle the remaining balance shortly. This swift action will mitigate any further impact on users.
It’s intriguing to note that Egorov’s latest predicament is not an isolated incident. Previously, he obtained loans amounting to $60 million from Aave, and this large borrowing exposed a potential risk of bad debt if his position were to be liquidated.
Gauntlet, a risk management company, proposed halting transactions in Aave’s CRV market (v2) to reduce potential risks for the protocol. In a separate transaction, Egorov disposed of 106 million CRV tokens, valued at approximately $46 million, to repay most of his outstanding debts on Aave and other lending platforms. By September, he had settled his debt with Aave by depositing around $11 million in USDT.
Prior to the market collapse, CRV was priced at $0.3582. Subsequently, its value tumbled approximately 40%, reaching a record low of $0.2220.
After that point, the token’s price rebounded and now stands at $0.2880. This upturn lessened the damages within the last 24 hours, shrinking them down to a 22% decrease.
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2024-06-14 01:16