This article provides an in-depth analysis of the recent event where Michael Egorov, the founder of Curve, had his lending position worth approximately $141 million in CRV liquidated. The article examines Egorov’s gains and losses in this large-scale liquidation and speculates on the future of Curve Finance.
Curve Finance is a DeFi platform that focuses on stablecoin exchange, and Egorov has been using the governance token CRV as collateral for his loans from multiple DeFi platforms, mainly crvUSD. However, the drastic fluctuations in the price of CRV token have put Egorov’s lending position at risk of liquidation.
On June 13th, Arkham reported that Egorov’s lending position worth nearly nine figures (approximately $141 million in CRV) had been entirely liquidated, resulting in bad debts of over $1 million on Curve’s lending platform, Llamalend.
The article also discusses Egorov’s previous experiences with liquidation and how he used short-selling strategies to stabilize the price of CRV during the first DeFi defense battle in November 2022. In August 2021, Egorov had to sell 159.4 million CRV to repay his loans and save his position.
The article explains how Egorov’s profit principle is similar to traditional stock borrowing operations, where he used CRV as collateral to borrow a significant amount of money from multiple DeFi platforms. Although he did not sell his CRV tokens directly, he converted part of their value into usable liquidity by borrowing against them.
The article also highlights the losses faced by other investors and lending platforms due to the price drop and subsequent liquidation of Egorov’s position. The TVL of Curve has decreased to less than one-tenth of its 2022 peak, and its ranking in the DeFi market has dropped to outside the top 15.
Finally, the article discusses how some investors, such as Christian, co-founder of NDV, have supported Curve and profited from the situation by buying CRV tokens from Egorov. However, the article concludes that Curve’s future looks bleak, and the DeFi industry needs to learn from these events.