Curve Financial’s Michael Egorov has $10 million in bad debt paid off in full.
Curve founder Michael Egorov says he has fully paid off $10 million in bad debt stemming from a June 13 hacking attempt.
Following the incident, Egorov took to social media and said: [The] The size of my positions was too large for the markets to handle and resulted in $10 million in bad debt, he said, before saying he had already paid off 93 percent of the debt.
The abduction
The June 13 hacking attempt resulted in a smooth liquidation of Egorov's positions due to a sudden and temporary increase in borrowing costs. At the height of the crisis, Egorov faced $140 million in liquidity due to $95 million in stable coin debt, and $60 million in annual fees to keep his positions open.
More significantly, the curve's token, CRV, experienced a steep decline amid the event—down 28 percent. As a solution, the Curve founder proposed to burn 10% of the CRV tokens valued at $37 million to stabilize the account price and increase the APY to incentivize the initiative's voters.
Related: Curve Finance Awards $250K for Re-Entry Exposure
Curve's recent crisis has renewed questions and concerns about the potential risk to the stability of the Curve platform, first presented in the 2023 Delphi Digital report on Egorov's debt positions. The report argues that Egorov's $100 million loan in DeFi protocols could cause significant pressure in DeFi.
The LLAMMA smooth liquid method works as intended
Despite the high pressures placed on the Curve platform, the LMMA's smooth fluid system performed as intended, explains Curve founder Michael Ingorov.
“The system performed amazingly. This gave liquidators time to prepare funds and OTC to fill the hacker's position. As a result, the system has hacker funds left, no bad debts, everything works great.”
The soft liquidation method works by eroding the borrower's “health” as a debt and slowly draining their money. Once the borrower's health reaches 0%, the system performs a hard liquidation of the borrower's assets and closes the loan.
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