The systemic danger underlying the Curve Finance protocol has not but been totally addressed and the protocol faces a “new stress take a look at” in February, based on a January 8 report from nameless cryptocurrency funding analyst and X-user DeFi Made Right here . In response to the report, numerous Curve (CRV) tokens will change into out there for buying and selling within the coming weeks, and the sale of those tokens may result in an analogous state of affairs as in August, when the CRV token threatened to break down. by way of worth. Nevertheless, DeFi Made Right here additionally warned that this state of affairs is simply a risk.
That is what analysis company Delphi Digital, founding father of Curve Finance, says Michael EGOROV owed $100 million to numerous DeFi protocols as of August 1. This debt was backed by CRV tokens, and critics have identified that this poses a danger to the Curve protocol and the DeFI system as an entire. Nevertheless, when Curve was hacked for $62 million 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 worth of the CRV token was roughly $0.63. It has since fallen to $0.55, down 12.7%, based on information from CoinMarketCap.
Within the report, DeFi Made Right here advised that this market lull could also be masking a significant weak spot within the Curve protocol. The analyst claims that Egorov was on the verge of chapter in August however knew 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 traders through over-the-counter (OTC) buying and selling and use the cash to repay debt. Nevertheless, this tactic would not work if the traders who purchased the cash dumped them available on the market, so Egorov pushed for a “handshake settlement” the place none of them can be bought till February 2024.
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