A sudden and dramatic crash in the value of CRV, Curve Finance’s native token, has resulted in significant losses for bullish investors and the platform’s founder, Michael Egorov. Blockchain analytics platform Arkham reported that Egorov had to deal with it liquidations a total of $140 million to CRV.
Curve Finance founder Egorov liquidated
On a social media after on
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Egorov’s accounts showed over a million dollars in bad debt on Curve’s Llamalend, which he managed to clear by receiving $6 million USDT. Additionally, while earning, Egorov experienced a $5 million liquidation on UwU Lend refunds on Inverse to limit further losses.
On June 13, Curve contributor Saint Rat wrote revealed that the protocol had incurred $11.5 million in bad debt, which could be resolved if CRV’s price rises to $0.33. Egorov expressed his commitment to work with the Curve Finance team to tackle the bad debt situation and protect users from its consequences.
Proposal to burn 10% of CRV tokens
In answer Due to the crisis, Egorov proposed to burn 10% of the total CRV supply to stabilize the price of the token. He also announced that active voters would receive a quarterly boost to deposit rewards across all Curve platforms, with the aim of encouraging participation and strengthening the ecosystem. Egorov too declared:
The Curve Finance team and I have been working to resolve the liquidation risk issue that occurred today. Many of you know that I had all my loans liquidated. The size of my positions was too big for the markets and caused 10 million bad debts. Only the CRV market on lend.curve.fi (where the position was largest) was affected. I have already paid back 93% and I plan to pay back the rest very soon. It will help users not to suffer from this situation.
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Interestingly, this recent episode is not the first time Egorov has faced significant liquidations. Last year he borrowed $60 million in loans from Aave, which put it at risk of bad debt in the event of liquidation.
To address this, Gauntlet, a risk management company, recommended freezing Aave’s v2 CRV market to minimize this protocol risks. In a subsequent private deal, Egorov sold 106 million CRV for $46 million to pay off most of his debt on Aave and other lending platforms, eventually settling his debt to Aave with an $11 million USDT down payment in September.
Before the market crash, CRV was trading at $0.3582. However, it plummeted by almost 40%, reaching a all time low of $0.2220.
Since then, the token has recovered and is currently trading at $0.2880. This recovery has helped reduce the losses incurred within the 24-hour time frame to 22%.
Featured image of DALL-E, chart from TradingView.com