DeFi
Curve Finance Founder Michael Egorov Suffers Massive Liquidations
Egorov’s CRV holdings fell to $34 million after he took out nearly $100 million in stablecoin loans backed by $141 million worth of CRV.
A sharp drop in the price of CRV caused Michael Egorov, the founder of Curve Finance, to experience tens of millions of dollars in liquidations after borrowing nearly $100 million in stablecoins backed by Curve’s governance token.
On June 13, Lookonchain, an on-chain analytics team, reported that Egorov’s guarantee on four loan protocols had been reduced to just $33.9 million of CRV securing $20.6 million in debts after going into liquidation.
According to Arkham Intelligence, an on-chain intelligence company, Egorov has already used $141 million worth of CRV to support $95.7 million of stable loans using the DeFi Inverse, UwU Lend, Fraxlend, LlamaLend and Aave lending protocols.
On June 12, Arkham noted that $50 million in Egorov loans had been taken out in the form of crvUSD from Llamalend, depleting the protocol’s crvUSD pool and incurring approximately 120% annual interest. Arkham warned that a 10% drop in the price of CRV would put Egorov’s positions into liquidation.
The price of CRV, Curve’s governance token, collapsed by more than 20% in the past 24 hours, according to CoinGecko, triggering the liquidation of many of Egorov’s positions. CRV is also down 40% over the past seven days.
Egorov also suffered a 5 million dollars liquidation on UwU loanwhile the founder of Curve did refunds to Reverse to avoid further losses.
The current status of Egorov’s assets suggests that around 78% of his assets have been liquidated so far to repay his debts.
CRV/USD. Source: CoinGecko.
Curve Lend, a lending protocol launched by Curve Finance, was also hit hard by CRV’s withdrawal and Egorov’s liquidation.
On June 13, Saint Rat, a pseudonymous Curve contributor, tweeted that the protocol generated $11.5 million in bad debt, adding that the debt would be wiped out if the CRV price reached $0.33. CRV last changed hands for around $0.28.
Egorov tweeted that he was working with the Curve Finance team to address bad debts.
“Many of you know that all my loans have been liquidated,” Egorov said. “The size of my positions was too large for the markets to handle and caused 10 million in bad debts. Only CRV market on [Curve Lend] Was affected. I have already repaid 93% and plan to repay the rest very soon. This will help users not to suffer from this situation.
Egorov also launched a governance proposal throw burning 10% of the total CRV supply in an attempt to stabilize the price of the token. He said active voters will receive a three-month boost on deposit rewards across all Curve platforms.
According to According to Arkham Intelligence, two of Egorov’s accounts also incurred over $1 million in bad debts on Curve’s Llamalend protocol. However, Egorov cleared the debt after selling 30 million CRV tokens to Christian Seale of NextGen Venture Partners for 6 million USDT.
“I just acquired $30 million CRV from Michael Egorov,” Seale tweeted. “Support Curve Finance and the future of DeFi.”
Irrecoverable debts
This latest episode is not the first time that Egorov has tackled heavy liquidations. Last year, loans worth $60 million borrowed from Aave by Egorov threatened to leave the protocol with bad debts in the event of liquidation.
In June, Gauntlet, a risk management company, recommended that Aave freezes its CRV v2 marketplace to prevent the token from securing new loans and minimize the risks posed to the protocol. A proposal to freeze the CRV market was adopted in August 2023.
The same month, Egorov sold 106 million CRV for $46 million in private deals to repay the majority of its debts on Aave and other lending protocols. Egorov settled his debt to Aave in September with a deposit of US$11 million.