Michael Egorov, founder of Curve Finance, faced heightened liquidation threats on June 13 after portions of his positions were liquidated. Data from Tradingview indicated that the price of the Curve DAO token, linked to the decentralized exchange, plummeted by 25% within the last day, trading at $0.262 at the time of reporting.
What Are the Financial Details?
According to blockchain data analysis platform Lookonchain, Egorov holds collateral of 111.87 million CRV tokens valued at $33.87 million and a debt of $20.6 million spread across four platforms. He used CRV tokens as security to borrow stablecoins from DeFi platforms Inverse, UwU Lend, Fraxlend, and Curve’s LlamaLend. Egorov initiated liquidation processes early today on Inverse but subsequently took steps to mitigate additional risks.
Egorov’s precarious position has a current health ratio of 1.07, with liquidation typically occurring when the ratio hits one. On-chain data reveals that Egorov has begun repaying the borrowed stablecoin DOLA, though the loan from UwU Lend remains under water.
What’s Happening on the Curve Front?
Blockchain data analysis firm Arkham predicted on June 12 that Egorov’s $140 million CRV positions were nearing liquidation and highlighted that the Curve founder would need to pay $60 million annually to maintain his positions on LlamaLend. The firm estimated that a roughly 10% drop in CRV’s value could trigger the liquidation of Egorov’s positions.
In August 2023, Egorov sold 106 million CRV for $46 million in strategic deals to mitigate potential liquidation risks tied to his debt on several DeFi platforms, including Aave. The incident illustrates that many blockchain platforms could face similar challenges. The ongoing crisis within Curve has deepened, particularly after a hacking incident, which may lead to further developments for the platform.
Key Takeaways for Stakeholders
- Monitoring health ratios is crucial to avoid forced liquidation.
- Repaying debts promptly can mitigate further liquidation risks.
- Strategic asset sales may help in managing debt-related risks.
- Awareness of token price drops is essential in maintaining collateral health.
The situation underscores the volatility and risks associated with DeFi platforms. Stakeholders should remain vigilant and adopt proactive measures to safeguard their investments.
