Curve Founder Faces Major CRV Liquidation After $95.7M Stablecoin Loan

Michael Egorov, the founder of Curve Finance, recently experienced a substantial liquidation of his CRV holdings after borrowing $95.7 million in stablecoins against the asset. Despite this, Egorov remains deeply committed to the project’s future.

On June 13, Egorov disclosed that he now holds a significant portion of his CRV in vote-escrow (ve) CRV tokens. This development has motivated him to enhance the project’s growth through game theory incentives. This statement follows his loss of over 100 million CRV tokens due to margin calls.

“In case anyone is wondering, I am committed to building Curve more than ever, thanks to game-theoretical implications of veTokenomics (mostly have veCRV now),” Egorov tweeted.

Egorov plans to focus on making Curve’s lending and borrowing products the safest in the industry, educating arbitrage traders on orderly liquidations, and designing mechanisms to encourage users to deposit crvUSD, Curve’s native stablecoin, into the protocol.

Understanding VE Tokenomics

VE tokens are non-transferable assets issued in exchange for locking up a project’s governance power. VE-token holders gain governance power proportional to the duration their tokens are locked, allowing them to vote on the allocation of new token emissions. This mechanism led to the “Curve Wars” in 2021, where DeFi protocols competed to direct CRV rewards to Curve liquidity pools, attracting liquidity from providers.

Liquidation Events

On June 12, Arkham Intelligence, an on-chain intelligence platform, indicated that Egorov was at risk of liquidation if CRV’s price dropped another 10%, after experiencing significant losses the previous week. Egorov had secured $95.7 million in stablecoin loans with $141 million worth of CRV.

By June 13, Lookonchain, an on-chain analytics provider, reported that Egorov’s positions had entered liquidation after a further 20% decline in CRV’s price over 24 hours. His positions were reduced to $33.9 million in CRV backing $20.6 million in loans.

CRV’s price fell 36% over seven days but rebounded 14% in the past 24 hours following Egorov’s liquidation. CRV has dropped 66% since mid-March.

Despite the large liquidation, many believe Egorov wasn’t significantly harmed by the margin calls. “Michael did not get ‘rekt’ by being liquidated on his CRV,” tweeted Ethereum developer Eric Conner. “He got $100mn in stables out of a $140mn CRV position. Selling it on market would have resulted in similar prices and a pissed community.”

Anthony Sassano, host of The Daily Gwei podcast, replied, “He just transferred the rektage to the community instead.”

Financial Moves

Lookonchain revealed that Egorov had “already cashed out and bought a mansion in 2023.” On-chain records show Egorov transferred $31 million in borrowed USDT to the Bitfinex exchange in April 2023. A month later, the Australian Financial Review reported that Egorov’s wife purchased a $41 million mansion in Melbourne, next to a home they had bought for $18.25 million the previous year.


Disclaimer: Not Investment Advice

it’s crucial to understand that the information provided here is not to be construed as investment advice. The crypto market is dynamic and highly speculative, and decisions should be made based on thorough personal research and consideration of individual risk tolerance. Always consult with financial professionals and conduct your own due diligence before making any investment decisions. The intention of this exploration is to present insights and trends, not to provide specific investment recommendations.

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