DeFi
Liquidated Founder Vows to Grow Curve Amid Accusations of Elaborate Withdrawals
The Curve founder suffered a huge CRV liquidation after borrowing $95.7 million worth of stablecoins against the asset.
Michael Egorov, the founder of Curve Finance, says he is more committed than ever to building Curve, despite liquidating a huge CRV stash in recent days.
On June 13, Egorov revealed that he was now primarily exposed to CRV through voting CRV(ve) tokens, motivating him to work on the project’s development through game theory incentives. The comments come after Egorov lost over 100 million regular CRV tokens to margin calls.
“In case anyone is wondering, I am more committed than ever to building Curve, thanks to the game theoretical implications of veTokenomics (most now have veCRV),” Egorov tweeted.
Curve founder added that he plans to ensure the protocol’s lending and borrowing products are “the safest in the industry,” by educating arbitrage traders on how to execute orderly liquidations and designing mechanisms to incentivize users to deposit crvUSD – Curve’s native stablecoin – into the protocol.
EV Tokenomics
VE tokens are non-transferable assets issued in exchange for locking in the governance power of a project. VE token holders receive governance power proportional to the length of time their tokens are locked up, allowing them to vote on how new token issuances are allocated.
This mechanism gave rise to the “Curve Wars» in 2021, where DeFi protocols competed to award CRV rewards to Curve liquidity pools for their respective assets, in turn attracting liquidity from liquidity providers (LPs).
Liquidated, but not reimbursed?
On June 12, Arkham Intelligence, an on-chain intelligence platform, reported that Egorov would soon face liquidation if the price of CRV fell another 10% after posting heavy losses over the previous week. Arkham said Egorov has already taken out stable loans worth $95.7 million backed by $141 million from CRV.
On June 13, Lookonchain, an on-chain analytics provider, job that Egorov’s positions had entered into liquidation after a further 20% drop in the price of CRV over 24 hours. Lookonchain said Egorov’s positions had been reduced to just $33.9 million worth of CRV backing $20.6 million worth of loans.
CRV price is currently down 36% in seven days, but has rebounded 14% in the last 24 hours following Egorov’s liquidation. CRV is also down 66% since mid-March.
However, despite a massive selloff, many observers believe that Egorov was unaffected by the margin calls.
“Michael did not obtain a “rekt” by being liquidated on his CRV”, tweeted Eric Conner, an Ethereum developer. “He got $100 million in stables on a $140 million CRV post. Selling it on the market would have resulted in similar prices and an angry community.
“He simply transferred the rektage to the community,” replied Anthony Sassano, host of The Daily Gwei podcast.
Lookonchain job that Egorov had “already cashed out and bought a mansion in 2023.”
Lookonchain shared on-chain records showing Egorov was transferred $31 million in USDT borrowed from the centralized exchange Bitfinex in April 2023. A month later, the Australian Financial Review reported that Egorov’s wife had purchased a $41 million mansion in Melbourne, the property being located next to a house they had purchased for $18.25 million a year previously.