The systemic threat underlying the Curve Finance protocol has not been totally addressed, and the protocol faces “one other stress check” in February, in response to a January 8 report from nameless cryptocurrency funding analyst and X person DeFi Made Right here. In keeping with the report, a lot of Curve (CRV) tokens will develop into obtainable for buying and selling within the coming weeks, and the sale of those tokens may result in an identical state of affairs that occurred in August, when the CRV token was in peril of collapsing in worth. Nonetheless, DeFi Made Right here additionally cautioned that this situation is simply a chance.
In keeping with analysis agency Delphi Digital, Curve Finance founder Michael EGOROV owed $100 mln to numerous DeFi protocols as of August 1. This debt was backed by CRV tokens, and critics have pointed to it as a threat to the Curve protocol and the DeFI system as an entire. Nonetheless, when Curve was hacked for $62 mln in August, Egorov paid off a few of his money owed and the protocol appeared to have weathered the storm. On the time of the hack, the value of the CRV token was roughly $0.63. It has since fallen to $0.55, down 12.7%, in response to knowledge from CoinMarketCap.
Within the report, DeFi Made Right here steered that this market lull could also be masking a serious weak spot within the Curve protocol. The analyst claims that Egorov was near liquidation in August, however knew that he couldn’t maintain his public promise to repay money owed if vital. In response to this menace, Egorov determined to promote a few of his CRV tokens to buyers by way of over-the-counter (OTC) buying and selling and use the money to repay debt. Nonetheless, this tactic wouldn’t work if the buyers who purchased the cash dumped them available on the market, so Egorov insisted on a “handshake settlement” whereby none of them could be offered till February 2024.
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