Curve Founder Pays 93% of $10M Bad Debt Due to Liquidity
Michael Egorov, founder of decentralized finance (DeFi) protocol Curve Financial, said that 93 percent of $10 million in bad debt was paid off in the protocol's soft liquidation, which was triggered earlier in the day.
“The size of my positions was so large that it was too big to control the markets and caused 10 million bad debts,” Egorov said. “I have already paid 93% and plan to pay back the rest soon.”
On June 13, Curve Financial's smooth liquidation method successfully managed a real-world test in a recent hacking attempt, but the price of its native CRV token fell more than 28% amid the uproar. According to blockchain analytics firm Arkham Intelligence, Egorov himself experienced $140 million in liquidity “by borrowing $95.7M in CRV (mostly crvUSD) across five accounts in five protocols.”
At the height of the crisis, Egorov was facing annual payments of $60 million to keep the loan in check. Arkham explained.
“This is because there is no crvUSD left on Lamaland to borrow from CRV. The three Egorov accounts hold more than 90% of the crvUSD borrowed on the protocol. If the price of CRV drops by ~10%, these positions will be available. Start liquidating.”
Egorov has since proposed burning 10% of the $37 million worth of CRV tokens to stabilize the token's price to pre-event levels. “As a reward, active voters will get a 3-month APY incentive on all platform deposits,” commented a blockchain executive.
This was not the first time that Egorov's CRV holdings and loans touched the protocol during the mandatory period.
In the year By August 2023, Curve had experienced a delinquency of up to $62 million, which, at the time, resulted in a $100 million loan from Egorov resulting in bad debt on Curve. The blockchain executive finally paid off.
Curve is currently the 19th largest DeFi protocol, according to blockchain analytics platform DeFillama. More than $2 billion worth of crypto assets are locked up in contracts.
Related: Curve Finance awards $250K for re-entry exposure
