A large CRV loan that was built up in the last week has mostly been cleared by the liquidation process on AAVE. However, the position is not fully insured and CRV 2.64 million (about $1.6 million in current value) remains. This represents <0.1% of the loan amount on the protocol.
According to the latest AAVE announcement, the liquidation cycle issue occurred during the 22nd of November in the protocol’s CRV pool. The liquidation was successful (as designed). However, the size of the position left some excess debt in the deal.
1/6 We want to address the cycle of liquidations that occurred in the CRV pool on the Aave Protocol today. The liquidations were successful (and worked as designed), but unfortunately, the size of the position left some excess debt within the protocol.
— Aave (@AaveAave) November 22, 2022
Most of the large CRV loans accumulated last week have been liquidated through the deal liquidation process. However, this position is not fully insured, at 2.64 million CRV (about $1.6 million). This represents less than 0.1% of the borrowed protocol.
Several mechanisms have been used to build the Aave ecosystem that the community can deploy in response to such events, including security modules, ecosystem reserves and DAO libraries.
Over the next few days, the community and its contributors will begin discussions around the event. Community contributor @monetsupply also opened a discussion on the governance forum about looking at the long-term asset risk of the market.
Earlier on the evening of November 22, a giant whale mortgaged $63.6 million from Aave V2, borrowed CRV 92 million and transferred it to an exchange to attempt to short CRV. The loans of the giant whales who shorted Curve on Aave V2 began to be liquidated.
In the last 24 hours CRV has increased by 22.87% and is currently trading at $0.642.
24h CRV price chart. Source: Coincu.com