As geopolitical tensions despatched crypto markets right into a tailspin final weekend, the Curve Finance neighborhood was once more pressured to contemplate the dangers posed by founder Michael Egorov.
Egorov got here near liquidation on his extremely leveraged CRV positions, which whole over $150 million, with CRV dipping under $0.38 on Saturday, in keeping with knowledge from CoinMarketCap.
On-chain analyst EmberCN identifies 5 addresses which have present open positions of $93 million price of stablecoins borrowed in opposition to 372 million CRV (price $162 million at time of writing).
It was additionally famous that the 20 million CRV place on Silo did briefly fall under its liquidation threshold, nevertheless, no liquidator took the chance to grab the collateral.
Egorov’s response, in a nod to the oft-repeated concept that he by no means plans to repay his loans after having purchased two Melbourne mansions, was to launch a brand new pool on Curve with the purpose of evening-out rates of interest on three crvUSD lending swimming pools.
Learn extra: Curve Finance ‘gentleman’s settlement’ expires, counterparties dump CRV
The Egorov saga is a sword of Damocles over the Curve neighborhood
If positions are allowed to hit their liquidation thresholds, the CRV collateral would start to be offered off by liquidation bots. These gross sales would trigger an extra drop within the CRV value, with extra liquidations to comply with; a scenario referred to as a liquidation cascade.
Such an occasion can be disastrous for particular person Curve holders and the numerous initiatives concerned within the so-called ‘Curve Wars’ — the label given to protocols that purpose to build up mass quantities of CRV as a way to acquire voting energy on Curve.
Egorov’s positions have been at risk a number of occasions prior to now, most notably after the hack of Curve itself. The final time he got here near liquidation, the fallout despatched the value of CRV down shortly, and, in a bid to pay down his money owed, Egorov offered a complete of virtually 40 million CRV at $0.40 every.
The over-the-counter (OTC) offers had been made with an understanding that the tokens wouldn’t be offered for six months.
In early February, the handshake association between the bailout suppliers expired, with some 8.75 million CRV seemingly dumped instantly, for round 17% revenue.
