DeFi Token CRV Tanks 30% of Curve Finance founder liquidation

You're seeing Michael Egorov, founder of stablecoin lending and lending protocol Curve Finance, settle his position.

He had more than 111 million CRV tokens in collateral and more than $20 million in debt across four DeFi platforms, Lookonchain reported on June 13.

As CRV prices fell, other areas became submerged, leading to more liquidity.

The founder of #Curvefi (Michael Egorov) is on Liquid!

It currently has $111.87M in CRV ($33.87M) in collateral and $20.6M in 4 platforms. pic.twitter.com/huwgetBXuS

— Lookonchain (@lookonchain) June 13, 2024

Table of Contents

Toggle

The woes of crooked finance

CRV's price has been collapsing for the past week, falling 45% since June 7. This has put pressure on those who use the token as collateral for DeFi loans, such as platform founders.

Further pressure on the platform and token prices came following the $20 million hack of the UwU lending protocol earlier this week.

In response to the incident, Egorov said that “smooth liquids” had good results. “The system has performed amazingly,” he said, before adding, “This has given liquidators time to prepare funds and OTC to meet the hacker's position.” As a result, the system has no slush funds, no bad debts, and everything works well.

Soft liquidity is part of the Curve Loan-Liquid Automated Market Maker Algorithm (LLAMMA).

In the year As of June 12, Egorov was borrowing $96 million in stablecoin, most of it in Curve's crvUSD, along with $141 million in CRV, across five accounts in five protocols, blockchain intelligence firm Arkham said.

Approaching $140M CRV Liquidity

Curve founder Michael Egorov is currently lending $95.7M in stablecoins (mostly crvUSD) with $141M in CRV, across 5 accounts in 5 protocols.

At current rates, Egorov is paying $60M annually to keep positions open… pic.twitter.com/ipTlWLZOAx

— Arkham (@ArkhamIntel) June 12, 2024

Industry observers and Diffie experts have previously warned about the potential impact of such a large debt position.

“This has ripples throughout the entire DeFi sector, unfortunately, so expect some returns,” commented trader ‘MisterSpread' on X on June 13.

In a post on X on June 13, Crypto Quant founder Ki Yang Ju said, “The CRV exchange account is at an all-time high and has increased by 57% in the last two hours.

DeFi failure

CRV's price surged 33% in minutes in late trading on June 12. The DeFi asset is currently trading at $0.283, following an intraday high of $0.374. CRV is now down 98% from its August 2020 high of $15.37.

Other DeFi tokens like GMX and Frax Share (FXS) are seeing losses today but not as hard.

Markets are flat at $2.58 trillion, with little movement from bitcoin and ethereum following their declines earlier this week.