Curve founder, Michael Egorov was liquidated for $140 Million in $CRV
Rumours say he indirectly dumped his bag by taking a massive loan position and never paid back while profiting $100M.
Let's discuss the Liquidation Event and impact on Curve. 🧵⏬
Rumours say he indirectly dumped his bag by taking a massive loan position and never paid back while profiting $100M.
Let's discuss the Liquidation Event and impact on Curve. 🧵⏬
1 || Structure of the thread:
- Brief overview of the event and its significance.
- Introduction to key players and concepts.
- Step-by-step explanation of the liquidation event and its components.
- Impact on Curve DAO and lessons learned.
-Summary and final thoughts
- Brief overview of the event and its significance.
- Introduction to key players and concepts.
- Step-by-step explanation of the liquidation event and its components.
- Impact on Curve DAO and lessons learned.
-Summary and final thoughts
2 ||
That being said, Egorov has been in a similar situation before. He sold more than 100 million CRV in July and August of last year in order to reduce the risks associated with liquidating his outstanding obligations.
To stop things from getting worse, a number of users, including Machi Big Brother, DWF Labs, and Justin Sun, purchased discounted CRV tokens the previous time.
That being said, Egorov has been in a similar situation before. He sold more than 100 million CRV in July and August of last year in order to reduce the risks associated with liquidating his outstanding obligations.
To stop things from getting worse, a number of users, including Machi Big Brother, DWF Labs, and Justin Sun, purchased discounted CRV tokens the previous time.
3 ||
Using CRV tokens as security, Egorov had borrowed a variety of stablecoins from DeFi platforms
According to @ArkhamIntel, Egorov saw all his lending positions fall below the liquidation threshold, leading to large-scale liquidations of CRV on various platforms.
Using CRV tokens as security, Egorov had borrowed a variety of stablecoins from DeFi platforms
According to @ArkhamIntel, Egorov saw all his lending positions fall below the liquidation threshold, leading to large-scale liquidations of CRV on various platforms.
https://x.com/ArkhamIntel/status/1801209817475780658
4 ||
This event is a highly significant one as @CurveFinance is a DeFi project that manages swaps between $USDT, $USDC and $ETH derivatives with minimal loss, with a global TVL of $2.3 billion.
If $CRV collapses, it could jeopardize $ETH re-staking and DeFi as a whole. Hence, that was why a lot of OTC were done in June/August.
This event is a highly significant one as @CurveFinance is a DeFi project that manages swaps between $USDT, $USDC and $ETH derivatives with minimal loss, with a global TVL of $2.3 billion.
If $CRV collapses, it could jeopardize $ETH re-staking and DeFi as a whole. Hence, that was why a lot of OTC were done in June/August.
5 ||
The key players in this event are UwU Lend, Fraxlend, Inverse, and LlamaLend.
Using LlamaLend liquidation threshold as an example here, part of the collateral was progressively converted into crvUSD by LlamaLend as it gets closer.
Meanwhile, if the collateral value drops anymore and hits the liquidation criteria the entire collateral will be converted into crvUSD to cover the loan.
The key players in this event are UwU Lend, Fraxlend, Inverse, and LlamaLend.
Using LlamaLend liquidation threshold as an example here, part of the collateral was progressively converted into crvUSD by LlamaLend as it gets closer.
Meanwhile, if the collateral value drops anymore and hits the liquidation criteria the entire collateral will be converted into crvUSD to cover the loan.
6 ||
As a result, Llamalend got hit with over $1 million in debt with no collateral, commonly known as “bad debt”.
However, Egorov managed to cover that after selling 30 million CRV tokens to NextGen Digital Venture partner known as "Christianeth" for $6 million.
As a result, Llamalend got hit with over $1 million in debt with no collateral, commonly known as “bad debt”.
However, Egorov managed to cover that after selling 30 million CRV tokens to NextGen Digital Venture partner known as "Christianeth" for $6 million.
7 ||
In order to maintain his holdings on Llamalend, Egorov is spending $60 million in interest annually.
Because Egorov borrowed more than 90% of the stablecoin holdings, there isn't much crvUSD available on the market, which accounts for the notable APY.
In order to maintain his holdings on Llamalend, Egorov is spending $60 million in interest annually.
Because Egorov borrowed more than 90% of the stablecoin holdings, there isn't much crvUSD available on the market, which accounts for the notable APY.
8 ||
All thanks to Arkham, you can still track Egorov’s holdings using this link below:
platform.arkhamintelligence.com/explorer/entit…
All thanks to Arkham, you can still track Egorov’s holdings using this link below:
platform.arkhamintelligence.com/explorer/entit…
10 ||
– Step-by-step explanation of the liquidation event
- Across four platforms, Egorov is in possession of 111.87 million CRV tokens, which are valued at $33.87 million in collateral and $20.60 million in debt.
- The value of DAO's $CRV token dropped sharply in a matter of hours on June 13, to price level $0.2210 (new ATL).
- The sharp decline in price is associated with holders of CRV experiencing panic upon the disclosure of Egorov's substantial borrowing in an Arkham report.
– Step-by-step explanation of the liquidation event
- Across four platforms, Egorov is in possession of 111.87 million CRV tokens, which are valued at $33.87 million in collateral and $20.60 million in debt.
- The value of DAO's $CRV token dropped sharply in a matter of hours on June 13, to price level $0.2210 (new ATL).
- The sharp decline in price is associated with holders of CRV experiencing panic upon the disclosure of Egorov's substantial borrowing in an Arkham report.
11 ||
- Following the liquidation of some of his $CRV assets, Curve Finance founder Michael Egorov is exposed to liquidation risk with regard to his on-chain loans.
- The crash set off a series of events that resulted in the liquidation of 10.58 million CRV tokens valued at $3.3 million on Fraxlend by another investor.
- Following the liquidation of some of his $CRV assets, Curve Finance founder Michael Egorov is exposed to liquidation risk with regard to his on-chain loans.
- The crash set off a series of events that resulted in the liquidation of 10.58 million CRV tokens valued at $3.3 million on Fraxlend by another investor.
12 ||
Michael Egorov's CRV position liquidation has brought to light a number of important issues that Curve DAO and the DeFi ecosystem need to address.
Few impacts already include financial losses for investors and lenders, pressure on liquidity, accumulated bad debt, depreciated community trust, bad sentiment and of course increased regulatory scrutiny.
Michael Egorov's CRV position liquidation has brought to light a number of important issues that Curve DAO and the DeFi ecosystem need to address.
Few impacts already include financial losses for investors and lenders, pressure on liquidity, accumulated bad debt, depreciated community trust, bad sentiment and of course increased regulatory scrutiny.
13 ||
– Lessons learnt here:
- Vigilant Risk Management: users and protocols alike must place a high priority on strict risk management procedures.
- Study Protocol Architecture: To ensure protocol resilience, safety measures, decentralized governance, and frequent audits must be included.
– Lessons learnt here:
- Vigilant Risk Management: users and protocols alike must place a high priority on strict risk management procedures.
- Study Protocol Architecture: To ensure protocol resilience, safety measures, decentralized governance, and frequent audits must be included.
14 ||
- Support and Preparedness: Establishing robust support systems and creating backup plans can offer crucial assistance during trying times.
- Regulatory Awareness: Procedures can better negotiate and adjust to evolving legal environments by being aware of and ready for the effects of regulations.
- Support and Preparedness: Establishing robust support systems and creating backup plans can offer crucial assistance during trying times.
- Regulatory Awareness: Procedures can better negotiate and adjust to evolving legal environments by being aware of and ready for the effects of regulations.
15 ||
Indeed $CRV is struggling at this period after hitting a new historic low and jeopardizing its investors trust in the platform.
At the end it does seem the founder had dumped his bag through liquidation method while not trying to cause a selling pressure.
Unfortunately, some investors got liquidated alongside him during the period of panic by the community.
Indeed $CRV is struggling at this period after hitting a new historic low and jeopardizing its investors trust in the platform.
At the end it does seem the founder had dumped his bag through liquidation method while not trying to cause a selling pressure.
Unfortunately, some investors got liquidated alongside him during the period of panic by the community.
16 ||
Even if Michael Egorov's liquidation was a significant event, the whole DeFi ecosystem should be able to learn from it as well.
DeFi can become more resilient and robust by implementing improved risk management procedures, enhancing protocol designs, and upholding strong community links.
This incident emphasizes how dynamic and ever-changing DeFi is, and how important it is to constantly adapt and improve future DeFi systems.
Even if Michael Egorov's liquidation was a significant event, the whole DeFi ecosystem should be able to learn from it as well.
DeFi can become more resilient and robust by implementing improved risk management procedures, enhancing protocol designs, and upholding strong community links.
This incident emphasizes how dynamic and ever-changing DeFi is, and how important it is to constantly adapt and improve future DeFi systems.
17 ||
This thread is for educational purposes only and not financial advice.
The information provided is based on publicly available data and personal interpretations. Kindly do your own research for any investment decisions.
This thread is for educational purposes only and not financial advice.
The information provided is based on publicly available data and personal interpretations. Kindly do your own research for any investment decisions.
18 ||
Tagging top chad alpha findoors to follow:
@eli5_defi
@Hercules_Defi
@Haylesdefi
@rektdiomedes
@CryptoGideon_
@Deebs_DeFi
@0xSalazar
@poopmandefi
@0xAndrewMoh
@ViktorDefi
@2lambro
@Trong0322
@CryptoNikyous
@0xCrypto_doctor
@Only1temmy
@arndxt_xo
@dontbuytops
@TheDeFISaint
@0xSuhan
Tagging top chad alpha findoors to follow:
@eli5_defi
@Hercules_Defi
@Haylesdefi
@rektdiomedes
@CryptoGideon_
@Deebs_DeFi
@0xSalazar
@poopmandefi
@0xAndrewMoh
@ViktorDefi
@2lambro
@Trong0322
@CryptoNikyous
@0xCrypto_doctor
@Only1temmy
@arndxt_xo
@dontbuytops
@TheDeFISaint
@0xSuhan
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