Curve Finance (CRV) was attacked due to a vulnerability in the programming language Vyper, causing CRV to fall; many people began to dig out the old accounts of Curve founder Michael Egorov, worried that their large amount of CRV tokens for mortgage loans would face liquidation and trigger a chain crisis. Research agency Delphi Digital analyzed the possible scenarios, as well as Curve's remedies.
(Reviewing the Curve founder’s borrowing incident: more than 100 million US dollars, all mortgaged with CRV and with large withdrawals)
Curve founders use 47% of circulating CRV for borrowing: Aave, FRAX, MIM
Research firm Delphi Digital briefly described the current situation of Curve founder Michael Egorov using CRV to borrow $100 million from a lending agreement. It believes that because Egorov took $427.5 million worth of CRV as collateral (accounting for 47% of the circulating supply), a 10% drop at one time put pressure on the health of the loan and may cause a series of CRV liquidations. Delphi Digital organizes the debt content as follows:
Lending Protocol Aave – Egorov holds $305 million in CRV as collateral for a $63.2 million USDT loan; under the liquidation condition that the borrowing ratio should remain at 55%, his position will be liquidated at 0.3767 CRV/USDT. If CRV continues to fall, liquidation will be initiated and an annualized interest rate of approximately 4% will also need to be paid.
In the lending agreement Fraxlend, Egorov provided 59 million CRV as debt of 15.8 million FRAX
Delphi Digital believes that Fraxlend’s FRAX/CRV lending pool will pose a serious threat due to high interest rates when the utilization rate is 100%.
Delphi Digital believes that as utilization remains at 100%, rates will double every 12 hours, increasing to nearly 10,000% APR in just 3.5 days. This astronomical interest rate could lead to his eventual liquidation regardless of the CRV price. Because at a maximum loan-to-value (LTV) of 75%, his position liquidation price could reach 0.517 CRV/FRAX in 4.5 days, which is not much of a drop from current prices.
According to statistics from Chain News as of press time, Egorov has repaid more than 5 million FRAX and withdrawn more than 18 million CRV. Utilization had dropped to 54.78% at press time, with interest rates at 87.174%
In addition, Egorov also repaid Abracadabra's MIM borrowings multiple times on 8/1 and redeemed CRV:
(Keep up to date on Egorov’s debt situation)
Delphi Digital: CRV lacks liquidity and threatens price
Delphi Digital believes that due to CRV's lack of liquidity, these large positions at risk pose a serious impact on CRV prices. As of press time, Delphi Digital has approximately $10 million in CRV liquidity on the chain, with a -2% depth of approximately $370,000 on the Binance exchange, and it believes that the scope of liquidation will expand and have a large-scale impact on the DeFi ecosystem. (Chain News has exceeded US$640,000 as of press time)
Curve launches new liquidity pools: crvUSD and CRV/FRAX LP
Delphi Digital stated that Curve launched a new liquidity pool today, including crvUSD and Fraxlend’s CRV/FRAX LP, and offering high CRV rewards.
Before the deadline of Chain News, nearly $6 million worth of liquidity had poured in, reducing the annualized reward to 60.09%.
The founder of Curve was sponsored by Sun Yuchen and others and gradually repaid debts
According to on-chain activities, Curve’s founder Michael Egorov’s address successively repaid Abracadabra’s MIM debt, repaid FRAX debt, and retrieved CRV on 8/1; he received multiple millions of USDT capital injections, including two million US dollars from Justin Sun. Curve's founder's debt health index at Aave was 1.57 at press time.
This article understands the liquidation crisis of the founder of Curve (CRV)! Justin Sun’s financial aid, high-reward CRV pool, and successive repayments of Aave/FRAX/MIM first appeared on Chain News ABMedia.