As an experienced financial analyst, I find Michael Egorov’s situation concerning, given the significant impact his overleveraged position had on Curve Finance. The liquidation event, resulting from his $95.7 million borrowing against $141 million in CRV collateral, caused a cascade effect leading to approximately $10 million in bad debt.
Michael Egorov, the founder of Curve Finance, explained the recent large-scale liquidation event by pointing towards the insufficient supply of crvUSD on the platform as the primary cause of the high APY (Annual Percentage Yield).
I’ve been actively engaged with the Curve Finance team in addressing the recent liquidation risk issue that affected many of us, including myself. Unfortunately, the size of my cryptocurrency positions was larger than the markets could handle, leading to approximately 10 million dollars worth of bad debt in the CRV market specifically. We’re working diligently to mitigate these risks and ensure a more stable investing environment for all.
— Michael Egorov (@newmichwill) June 13, 2024
In this situation, the excessive debt of the person led to a chain reaction, accumulating approximately $10 million worth of bad debts. Egorov announced that he’s collaborating with Curve Finance to find a solution for these problematic debts.
Michael Egorov, the mastermind behind curve creation, obtained a loan of approximately $95.7 million in stablecoins, primarily crvUSD, by using his CRV collateral worth around $141 million across five different protocols.
Michael Egorov is now more vulnerable to having his positions closed forcibly due to the use of on-platform loans with a current outstanding debt of $20.6 million, despite having collateral worth 111.87 million CRV or approximately $33.87 million across four different platforms, as reported by Lookonchain.
As an analyst, I’d like to point out that Egorov acknowledged the user in question took significant actions by repaying 93% of their debt, with the intention of settling the remaining amount promptly. This proactive measure is essential to prevent any additional disruptions and minimize potential losses for other platform users.
As a crypto investor, I’m keeping a close eye on Curve Finance, the platform renowned for its stablecoin-centric automated market maker (AMM). Given recent developments, it’s reasonable to assume that they are carefully examining their protocols and risk management strategies in response.
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2024-06-13 23:00