Curve liquidation risk is a systemic danger to DeFi, and its creator is scrambling to pay back debts
Even if DeFi traders stepped in to protect CRV after a breach at Curve Finance, a widespread crisis is still possible.
The Ethereum decentralized exchange Curve Finance was hacked on July 30 owing to a flaw in the way certain pools were written in the Vyper programming language.
Curve DAO (CRV) fell to a two-month low of $0.58 on the day of the breach, a decrease of 20.91%. Concerns over the liquidation of Michael Egorov’s $100 million in debts secured by Curve Ventures (CRV) led to a further drop in the value of CRV the next day, sending it to a seven-month low of $0.48.
However, recent occurrences like debt repayment and large short positions in the options market imply CRV might rise in the near future.
According to statistics compiled by Lookonchain, on August 1st, Egorov made a total of $15.8 million through the sale of 39.25 million CRV tokens for stablecoins to prominent names in the decentralized financial industry such as Justin Sun, Machi Big Brother, and DWF Labs.
The purchasers paid $0.40 for each CRV token, a reduction of 25% off the token’s then-current market price.
Egorov made a partial principal payment on his Aave Tether loans, bringing the total amount owed down to $54.1 million from $63.20 million, as shown by information from DeBank. The loan being repaid in part is a good sign since it lowers the likelihood of liquidation.
Currently, if the CRV price drops to $0.36 or below, Egorov’s debts on Aave will be liquidated as per DefiLlama.
