The CRV token, a key asset in the Curve lending protocol, experienced a significant 30% decline in the Asian market today. This depreciation was triggered by the automatic liquidation of certain loan positions reportedly connected to Michael Egorov, the founder of Curve. Observers in the market pointed out that these positions were liquidated due to an imminent risk of hedge failure.
Analyses conducted by blockchain data companies Lookonchain and Arkham indicate that Egorov-linked addresses had accumulated loans worth around $100 million in stablecoins, predominantly in crvUSD. These loans were backed by approximately $140 million in CRV tokens.
A profile from Debank, which tracks Egorov’s portfolio, revealed that he had taken out loans from various entities such as Inverse, UwU Lend, Fraxlend, and Curve’s LlamaLend, using CRV tokens as collateral. Additionally, it was noted that the total assets in the monitored portfolio had decreased by 50% in the past 24 hours.
Transactions from Egorov’s wallet displayed his efforts to manage risks. During the early Asian hours, he made loan repayments on Inverse and Llamalend using FRAX, DOLA, and CRV tokens. Furthermore, some of the linked addresses exchanged CRV for Tether (USDT), according to the data.
The liquidation of this substantial position had repercussions on other DeFi protocols, as CRV plays a crucial role as a trading pair and collateral across various trading pools in the ecosystem. An address on Frax Lend saw $3.3 million worth of positions being liquidated as CRV prices dropped.
This is not the first time Egorov’s loan positions have impacted the cryptocurrency market. Last year, a glitch in multiple Curve lending pools caused a sharp decline in CRV prices, jeopardizing liquidity worth over $100 million. At the time of writing, the price of CRV stood at $0.283, marking a 21% decline in the past 24 hours.
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