Curve Finance recently faced a real-world test of its soft liquidation mechanism during a hacking attempt. Despite a significant drop in the native token CRV's price by over 28%, the liquidation process functioned as intended. Michael Egorov, the founder of Curve Finance, encountered substantial liquidation pressures on June 13 when the CRV token price plummeted. Egorov's transaction history revealed efforts to manage his debt positions through multiple liquidations and transactions with DeFi platforms like Inverse Finance and Curve.fi. The soft liquidation mechanism, an integral part of Curve Finance's Lending-Liquidating Automate Market Maker Algorithm (LLAMMA), ensures liquidations take place without resulting in unrecoverable debts. According to official LLAMMA documentation, this mechanism involves depositing collateral into specific bands across the automated market maker (AMM) to enable continuous liquidation if necessary. However, positions in soft-liquidation/de-liquidation might incur losses due to collateral buying and selling, impacting the loan's health. Once a user's health reaches 0%, the position may face hard liquidation. Despite these protective measures, the market reacted sharply to the event, with CRV price dropping over 28% in the last 24 hours. This incident has brought attention to Curve Finance's underlying systemic risks, particularly related to Egorov's debt obligations.