Addresses tied to Curve founder Michael Egorov are borrowing nearly $100 million in various stablecoins against $140 million in CRV tokens, resulting in a significant financial risk. Data tracking firms reported that Egorov has taken a cumulative loan of almost $100 million, using CRV tokens as collateral.
CRV Token Plunge and Loan Liquidation
The CRV token experienced a 30% drop in early Asian trading hours as loan positions associated with Egorov began to liquidate automatically. This sudden liquidation led to increased selling activity, further driving down the token’s price. Egorov’s addresses have borrowed stablecoins, primarily crvUSD, amounting to $100 million against $140 million in CRV collateral.
Borrowing from Multiple Protocols
A Debank profile tracking Egorov’s wallet shows that he has borrowed from Inverse, UwU Lend, Fraxlend, and Curve’s LlamaLend, using CRV tokens as collateral. Total holdings across these tracked wallets have decreased by 50% in the past 24 hours.
Mitigating Risks and Transactions
Wallet transactions indicate that Egorov is actively taking steps to mitigate risks. During early Asian hours, several loans were repaid on Inverse and LlamaLend using FRAX, DOLA, and CRV tokens. Additionally, some addresses conducted multiple swaps between CRV and tether (USDT). The liquidation of such a large position has put pressure on other DeFi protocols since CRV is used as a trading pair and ballast in trading pools across the ecosystem.
One address on Frax Lend, a different lending and borrowing protocol, saw $3.3 million in liquidated positions as CRV prices fell. The current situation echoes a similar incident in 2023 when an exploit of several Curve lending pools caused CRV prices to dump suddenly, putting over $100 million at risk of being liquidated.
Industry Response
During the 2023 incident, prominent DeFi figures, such as Tron founder Justin Sun, intervened to supply liquidity and prevent bad debt. Sun acquired millions in CRV at a discount to avert the risk of collateral damage across the crypto ecosystem.
Michael Egorov’s substantial borrowing against CRV tokens highlights the volatility and risks inherent in the DeFi landscape. As his loan positions face liquidation, the broader impact on DeFi protocols and the crypto market remains significant. This scenario underscores the interconnectedness of the DeFi ecosystem and the ripple effects that can occur when major players face financial distress.
