A sharp decline in the price of CRV has caused Michael Egorov, the founder of Curve Finance, to suffer tens of millions of dollars in liquidations after borrowing nearly $100 million in stablecoins backed by Curve’s governance token.
Egorov’s CRV holdings have dropped to $34M after previously taking out nearly $100M in stablecoins loans backed by $141M worth of CRV.
On June 13, Lookonchain, an on-chain analytics team, flagged that Egorov’s collateral across four lending protocols had been reduced to just $33.9 million worth of CRV backing $20.6 million in debts after being forced into liquidation.
The #Curvefi founder(Michale Egorov) is being liquidated!
He currently has 111.87M $CRV($33.87M) in collateral and $20.6M in debt on 4 platforms.https://t.co/WM1nW8JKwU pic.twitter.com/huwgetBXuS
— Lookonchain (@lookonchain) June 13, 2024
According to Arkham Intelligence, an on-chain intelligence firm, Egorov previously used $141 million worth of CRV to back $95.7 million worth of stablecoin loans using the DeFi lending protocols Inverse, UwU Lend, Fraxlend, LlamaLend, and Aave.
On June 12, Arkham noted that $50 million worth of Egorov’s loans were taken out in the form of crvUSD from Llamalend, exhausting the protocol’s crvUSD pool and resulting in annual interest of roughly 120%. Arkham warned that a 10% drop in the price of CRV would place Egorov’s positions in liquidation.
The price of CRV, Curve’s governance token, has crashed by more than 20% in the past 24 hours, according to CoinGecko, triggering many of Egorov’s positions to enter liquidation. CRV is also down 40% in the past seven days.
Egorov also suffered a $5 million liquidation on UwU Lend, while Curve’s founder has made repayments on Inverse to stave off further losses.
The current state of Egorov’s holdings suggests that around 78% of his holdings have been liquidated to pay down his debts so far.
Curve Lend, a lending protocol launched by Curve Finance, has also been severely hit by the recent CRV drawdown.
On June 13, Saint Rat, a pseudonymous Curve contributor, posted on the X platform that the protocol has incurred $11.5 million worth of bad debt, adding that the debt would be cleared if the price of CRV rises to $0.33. CRV last changed hands for roughly $0.28.
$CRV isn’t dead
We do have $11.5M of bad debt in Curve Lend, but this could clear itself if $CRV price goes back up through the bands between $0.29-0.33
Theoretically if the CRV price got to around $0.40ish everyone would be repaid
— Saint (Llama) Rat (@saint_rat) June 13, 2024
Bad Debt
The latest episode is not the first time that Egorov has stared down the barrel at hefty liquidations. Last year, $60 million worth of loans borrowed from Aave by Egorov threatened to leave the protocol with bad debt in the event of liquidation.
In June, Gauntlet, a risk management firm, recommended that Aave freeze its v2 CRV market to prevent the token from backing new loans and to minimize risks posed to the protocol. A proposal to freeze the CRV market passed in August 2023.
That same month, Egorov sold 106 million CRV for $46 million in private deals to pay down the majority of his debts on Aave and other lending protocols. Egorov closed out his debt to Aave in September with a deposit of $11 million USDT.
Curve Founder sold 106M CRV so far in OTC "handshake" deals, in exchange for $42.4M. pic.twitter.com/EeXoCc0hB3
— Sandra (@sandraaleow) August 4, 2023
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