Curve Finance is addressing a recent liquidation crisis that severely impacted its CRV token market. After the liquidation of large loans, the founder of the platform, Michael Egorov, has suggested to burn 10% of the total CRV supply.
This move is intended to prevent the token price from further dropping, which has recently fallen by almost 30%.
Curve Finance Plans 10% CRV Burn
Michael Egorov has suggested that in order to solve the liquidation crisis which has caused a lot of volatility to the market,10% of the total supply of CRV should be burned. This measure is to ensure that the price of CRV token is better controlled and the effects minimized on the users.
Egorov shared this news on X (formerly Twitter) stating that the focus should be on keeping the market’s confidence and stability of the platform.
The Curve Finance team and I have been working to solve the liquidation risk issue which happened today.
Many of you are aware that I had all my loans liquidated. Size of my positions was too large for markets to handle and caused 10M of bad debt. Only CRV market on…
— Michael Egorov (@newmichwill) June 13, 2024
Egorov has also noted that he has paid off 93% of his debt and intends to pay off the rest soon. He hopes that these steps will help to avoid further harm for users impacted by the situation. To encourage people in the community, the active voters on the burn proposal will be provided with a 3-month APY booster on all the platform’s deposits.
Details of the Michael Egorov Liquidation
The liquidation event started when Egorov’s loans in stablecoins worth $95.7 million, mostly taken as collateral from $141 million in CRV tokens got liquidated due to a drastic drop in the value of the token. The CRV price dropped from $0.35 to a low of $0.23, causing forced liquidations on several DeFi protocols.
This situation generated about $10 million in bad debt and impacted mostly the CRV market on lend. Curve. fi.
4/ Since Michael Egorov borrowed too many stablecoins with CRV as collateral, he had to sell $CRV through OTC to repay the loan after #Curve was attacked on July 31, 2023.
He sold a total of 156.35 $CRV for $62.5M at a price of $0.4 through OTC.https://t.co/NthuRPSfom
— Lookonchain (@lookonchain) June 13, 2024
Egorov’s positions were divided into five accounts on five different protocols namely Llamalend, UwU Lend, Fraxlend, and others. Some of the liquidations were 20.2 million CRV on UwU Lend and 10.58 million CRV on Fraxlend. According to the data provided by the blockchain analytics firm Arkham, such liquidation might proceed if the CRV price falls even more.
Previous Financial Maneuvers
This is not the first time when Egorov has faced the financial problems connected with his CRV investments. Last year, he was involved in a big exploit on Curve; however, with the help of key players in the DeFi industry, he was saved from liquidation.
This time, to cover the debt, Egorov was sent $6 million of Tether (USDT) by NextGen Venture Partner Christian Seale. This injection of the money enabled him to pay off more than $1 million in bad debt from two of his accounts on Curve’s Llamalend.
Meanwhile, the Curve DAO Token (CRV) price has yet to recover, with the price exchanging hands at $0.2932, a 20.30% decline. Concurrently, the CRV’s market capitalization dipped by 18% to $371,047,573, while the 24-hour trading volume surged by 932% to $763,010,076, with traders accumulating the dip.
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Kelvin is a distinguished writer specializing in crypto and finance, backed by a Bachelor’s in Actuarial Science. Recognized for incisive analysis and insightful content, he has an adept command of English and excels at thorough research and timely delivery.
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