CRV, the governance token of Curve, a decentralized exchange for stablecoins and a major player in the decentralized finance (DeFi) industry landscape, has rebounded impressively, adding 22% after sinking to August 2023 lows this week.
On Aug. 3, CRV is trading at $0.59, up double digits after falling to $0.48 on Aug. 1 following a damaging hack causing liquidity providers in several pools to lose money.
Whales come in to buy CRV
This recovery is mainly attributed to strategic actions by notable crypto whales who have stepped in to mitigate risks on DeFi if CRV prices continue to rise. Meanwhile, Michael Egorov, the founder of Curve and one of the largest CRV holders, is actively offloading tokens into the secondary market.
Egorov sells to whales like Justin Sun, the founder of Tron, and other venture capital funds and decentralized autonomous organizations (DAOs). The founder had about 292 million CRV and used a large percentage to cover his loans.
On-chain data indicates that on August 2, Egorov sold 3.75 million CRV tokens to Yearn Treasury and another 1.25 million CRV tokens to Stake DAO Governance through the over-the-counter (OTC) market.
Egorov has sold a total of 59.5 million CRV to various institutions and investors, raising approximately $23.8 million. These OTC sales are at significant discounts, reflecting the founder’s efforts to stabilize CRV prices and prevent further contagion.
In the July 30 hack, attackers stole funds from several liquidity pools after exploiting a re-entry flaw. JPEG’d, Alchemix, Pendle, and Metronome pools suffered losses initially estimated at about $70 million. However, other reports suggest that white hat hackers intervened, reducing the total impact to about $50 million.
As a result of this news, CRV prices fell by more than 12%. Given Curve’s prominence in DeFi, the hack and price crash caused reverberations in Curve and DeFi, especially in decentralized money markets.
Curve is a big player in DeFi, Egorov pays off debt
Curve manages more than $2 billion as a Total Value Locked (TVL), according to DeFiLlama. While there are no confirmed impacts on other protocols, the focus has been on Egorov’s $60 million Aave v2 loan, which was primarily backed by CRV. Should this loan be liquidated, it would likely lead to more selling pressure on CRV, which could lead to another possible contagion, especially for other CRV holders with loans through different protocols.
Looking at on-chain data, Egorov is taking active steps to mitigate the risks associated with his huge Aave loan that is over-backed by CRV. Egorov wants to minimize the possible consequences of forced liquidation through off-market transactions, selling his CRV at a discount and at the same time repay his loan. This, in turn, seems to support prices.
Feature image from Canva, chart from TradingView