Zhiyuan Sun5 hours agoCurve founder repays 93% of $10M bad debt stemming from liquidationThe DeFi protocol"s native token plunged by 28% in a single day due to liquidations stemming from a hack attempt.739 Total views3 Total sharesListen to article 0:00NewsOwn this piece of crypto historyCollect this article as NFTJoin us on social networksMichael Egorov, founder of decentralized finance (DeFi) protocol Curve Finance, claims to have repaid 93% of $10 million in bad debt from the protocol"s soft liquidation triggered earlier in the day.
"Size of my positions was too large for markets to handle and caused 10M of bad debt," said Egorov. "I have already repaid 93%, and I intend to repay the rest very shortly."
On June 13, Curve Finance"s soft liquidation mechanism successfully managed a real-world test during a recent hacking attempt, but its native CRV token price plunged by over 28% amid the chaos. According to blockchain analytics firm Arkham Intelligence, Egorov himself faced $140 million in liquidations due to "borrowing $95.7M in stablecoins (mostly crvUSD) against $141M in CRV across five accounts on five protocols."
During the peak of the hack, Egorov faced paying $60 million in annualized fees to maintain his borrowings. Arkham explained: "This is because there is almost no remaining crvUSD available to borrow against CRV on Llamalend. Three of Egorov"s accounts already make up over 90% of the borrowed crvUSD on the protocol. If the price of CRV drops by ~10%, these positions may begin to be liquidated."
Egorov has since proposed burning 10% of the outstanding CRV tokens, worth $37 million at the time of publication, to stabilize the token"s price to pre-incident levels. "As a reward, Active voters will earn a 3-month APY booster on all platform deposits," the blockchain executive commented. Curve Founder Michael Egorov"s CRV holdings. Source: Arkham
This was not the first time Egorov"s CRV holdings and borrowings have impacted the protocol during times of duress.
In August 2023, Curve suffered an exploit amounting to $62 million, which too, resulted in bad debt from Egorov"s $100 million borrowings on Curve at the time. The blockchain executive eventually paid the funds back.
Curve is currently the 19th largest DeFi protocol, according to blockchain analytics platform DeFiLlama. It has more than $2 billion worth of crypto assets locked within its contracts.
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