DeFi
DeFi Token CRV Hits 30% as Curve Finance Founder Liquidates
The founder of stablecoin lending and borrowing protocol Curve Finance, Michael Egorov, sees his position liquidated.
It had over 111 million CRV tokens as collateral and $20 million in debt across four DeFi platforms, Lookonchain reported on June 13.
As the price of CRV fell, other positions collapsed, causing a cascade of liquidations.
The woes of Curve Finance
CRV prices collapsed last week, having fallen 45% since June 7. This has put pressure on those who use the token as collateral for DeFi loans, such as the platform’s founder.
Additional pressure was placed on the platform and token prices following a $20 million investment. To hack from the UwU Loan Protocol earlier this week.
In response to the incident, Egorov said that the “soft liquidations” worked well. “The system performed fantastically,” he said before adding: “This gave the liquidators time to prepare the funds and liquidate the hacker’s position over the counter.” Result: the system has no more pirate funds, no more bad debts, everything works well.”
Soft liquidations are part of Curve’s Lending-Liquidation Automated Market Maker Algorithm (LLAMMA).
As of June 12, Egorov borrowed approximately $96 million in stablecoins, primarily Curve’s crvUSD, compared to $141 million in CRV, across five accounts across five protocols, according to at blockchain intelligence company Arkham.
Industry observers and DeFi experts had already warned of the potential impacts of a project of this magnitude. debt situation.
“This unfortunately has ramifications throughout the DeFi sector, so expect pushbacks.” commented trader ‘MisterSpread’ on X on June 13.
“The CRV balance on exchanges has reached an all-time high, increasing 57% in the last two hours,” observed Ki Young Ju, founder of Crypto Quant, in an article on X on June 13.
The fallout from DeFi
CRV prices fell 33% in just a few minutes in late trading on June 12. The DeFi asset is currently trading at $0.283 after a decline from an intraday high of $0.374. CRV is now down 98% from its all-time high of $15.37 in August 2020.
Other DeFi tokens such as GMX and Frax Share (FXS) are also seeing losses today, but not as severe.
Markets are flat on the day at $2.58 trillion, with very little movement from the Bitcoin and Ethereum after their falls earlier this week.