As an experienced analyst, I believe that the recent price crash of CRV and the liquidation of Michael Egorov’s positions present significant concerns for investors in Curve Finance. The sudden decline in CRV’s value, triggered by reports of Egorov’s large borrowing activities using CRV as collateral, has led to widespread panic among holders.
As a researcher studying the decentralized finance (DeFi) landscape, I’ve noticed that Curve (CRV), a well-known protocol for facilitating low-fee stablecoin swaps, is currently grappling with two significant challenges. Firstly, the price of its native token, CRV, has seen a sharp decline of approximately 28% within the last 24 hours. Secondly, there have been substantial liquidations of CRV collateral totaling millions of dollars.
As a researcher observing the market trends, I’ve noticed a significant drop in the token’s value. Specifically, it reached $0.273 – a 28% decrease from the previous day’s price. This decline occurred rather swiftly, with a particularly sharp crash taking place within the last few hours.
The abrupt drop in CRV prices can be explained by the mounting fear among investors, instigated by a report from Arkham, a reputable crypto intelligence platform. This report disclosed that Michael Egorov, Curve’s founder, had borrowed an enormous sum of $95.7 million in stablecoins (mainly crvUSD) using CRV as collateral, amounting to approximately $141 million, through five distinct protocols.
Michael Egorov, founder of Curve, is currently obtaining loans worth around $95.7 million in stablecoins (mainly crvUSD) using $141 million in CRV as collateral, distributed across five accounts on five different protocols. At present rates, he is required to pay approximately $60 million per year to maintain these positions.— Arkham (@ArkhamIntel) June 12, 2024
Michael faces increased risk of having his on-chain loans seized due to market movements, after some of his trading positions were partially liquidated on Thursday.
As a crypto investor, I currently have 111.87 million CRV, which is equivalent to around $33.87 million, locked up as collateral across four different platforms. Simultaneously, I owe approximately $20.6 million in debt on these same platforms.
Michael Egorov, the creator of Curve Finance, obtained multiple stablecoins as loans from decentralized finance (DeFi) providers including Inverse Finance, UwU Lend, Frax Lend, and Curve’s LlamaLend, utilizing CRV tokens to secure these loans.
As a crypto investor, I found myself in a precarious situation with my position on Inverse earlier today. Despite having a healthy leverage rate of 1.07, which is generally considered safe, I started facing liquidations due to market volatility. To minimize the risk, I took swift action and began repaying the borrowed DOLA stablecoin on Inverse to strengthen my position. However, my loan on UwU Lend remains at risk, as I continue to closely monitor the situation and explore options to mitigate further potential losses.
According to blockchain intelligence firm Arkham, Egorov’s CRV holdings, valued at around $140 million, were nearing a potential liquidation point as of last Wednesday. Additionally, Arkham highlighted that Egorov was bearing an annual cost of approximately $60 million to maintain his positions on LlamaLend.
As a researcher studying financial markets, I’ve noticed that Egorov’s recent swift liquidation indicates possible financial pressures or risk management concerns. This event underscores the inherent unpredictability and risks involved when utilizing cryptocurrencies as collateral for borrowing.
Currently, neither the Curve Protocol founder nor the Curve Finance team has issued a public statement concerning the sudden crash in CRV prices. It’s important to note that Egorov did acknowledge liquidation risks in response to a user query on a separate platform about 10 hours before the current price decrease.
As an analyst, I cannot help but express my concern over the absence of official updates from Curve’s leadership team. This silence only intensifies the unease among investors. It is essential for transparency and accountable risk management in the decentralized finance (DeFi) sector, especially when founders involve themselves in leveraged positions that could potentially sway a project’s equilibrium.
This is a developing story, and CNBC will continue to monitor the situation for further updates.
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2024-06-13 09:40