The Risk Faced by Michael Egorov in Curve Finance

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by Giorgi Kostiuk

2 years ago

Made with AI

Michael Egorov's Escalating Liquidation Risk

Founder of Curve Finance, Michael Egorov, encountered a heightened liquidation risk on June 13 when a portion of his positions faced liquidation. Tradingview data revealed a 25% decrease in the Curve DAO token price over the past 24 hours, currently trading at $0.262.

Significant Development for Curve

As per analysis by the blockchain data platform Lookonchain, Egorov holds collateral of 111.87 million CRV tokens valued at $33.87 million, with a debt of $20.6 million spread across four platforms. Egorov utilized CRV tokens as collateral to borrow stablecoins from DeFi platforms such as Inverse, UwU Lend, Fraxlend, and Curve’s LlamaLend. Today, Egorov faced liquidation on Inverse but took steps to mitigate other risks.

Presently, Egorov's underwater position maintains a health ratio of 1.07, nearing the typical trigger point of one for liquidation. On-chain data indicates Egorov is initiating repayments for borrowed stablecoin DOLA, while the UwU Lend loan remains underwater.

Curve's Current Scenario

On June 12, data analysis firm Arkham anticipated liquidation approaching on Egorov's $140 million CRV positions, estimating an annual $60 million payment to uphold his LlamaLend positions.

Estimations from the data analysis firm suggest that a 10% drop in CRV's value could prompt liquidation of Egorov's positions. In August 2023, Egorov sold 106 million CRV for $46 million in transactions to manage potential liquidation risks tied to existing debt across various DeFi platforms like Aave.

This unfolding process not only reflects Egorov's circumstances but also raises concerns about similar situations across blockchain platforms. The recent Curve crisis, amplified post a hack, augurs potential developments for the platform in the near future.

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