When geopolitical tensions despatched crypto markets right into a tailspin final weekend, the Curve Finance group was as soon as once more compelled to reckon with founder Michael Egorov’s dangers.
Egorov got here near liquidation because of his extremely leveraged CRV holdings, which whole greater than $150 million, with CRV falling beneath $0.38 on Saturday, in accordance with CoinMarketCap information.
On-chain analyst EmberCN identifies 5 addresses with present open positions value $93 million value of stablecoins borrowed at 372 million CRV (value $162 million on the time of writing).
It was additionally famous that the 20 million CRV place Though Silo briefly fell beneath the liquidation threshold, no trustee took the chance to grab the collateral.
Egorov’s reply, in a nod to the oft-repeated principle that he by no means plans to pay again his loans after shopping for two Melbourne mansions, was to launch a brand new pool on Curve with the purpose of accelerating the curiosity on three CRVUSD mortgage swimming pools to equalize.
Learn extra: Curve Finance’s ‘Gentleman’s Settlement’ expires, counterparties dump CRV
The Egorov saga is a sword of Damocles on the Curve group
If positions have been to achieve their liquidation thresholds, the CRV collateral could be bought by liquidation bots. These gross sales would trigger an additional drop within the CRV worth, leading to extra liquidations; a state of affairs generally known as a liquidation cascade.
Such an occasion could be disastrous for particular person Curve holders and the numerous tasks concerned within the so-called ‘Curve Wars’ – the label given to protocols that purpose to gather giant quantities of CRV to achieve voting energy over Curve.
Egorov’s positions have been in danger a number of instances up to now, most notably after the hack of Curve itself. The final time he virtually went bankrupt, the fallout brought on the worth of CRV to drop quickly, and in an try and repay his money owed, Egorov bought a complete of just about 40 million CRVs for $0.40 every.
The over-the-counter (OTC) offers have been made with the understanding that the tokens wouldn’t be bought for six months.
In early February, the handshake settlement between the rescue organizations expired, with some 8.75 million CRV seemingly instantly dumped, yielding a acquire of about 17%.