Curve Finance Founder Sells OTC Tokens to Maintain Loan Positions on Fraxlend

Following a series of dramas since the evening of July 30, the race to liquidate the loan position of Curve Finance founder Michael Egorov on Fraxlend has seen new developments.

The Incident Background

The issue began on July 30 when a security vulnerability in the Vyper language led to attacks on liquidity pools on Curve Finance. Although part of the damage from the CRV-ETH pool was reimbursed, concerns about the CRV token arose since a significant portion of its supply was collateralized by Curve Finance's founder to borrow money on various DeFi protocols.

The liquidation race for Michael Egorov's position started on the evening of July 31.

Latest Developments in Egorov's Wallet

Recent activities in Michael Egorov's wallet include:

• Receiving USDT in batches of 1 million;
• Depositing USDT into Fraxlend to reduce the debt ratio;
• Withdrawing 2.5 million CRV in batches from Fraxlend;
• Transferring CRV to unknown wallets.

This loop has been executed three times (as of the writing), reducing the loan on Fraxlend by approximately $3 million. The calculated transaction price is $0.40/CRV, which is lower than the market price of $0.55.

The Twitter community speculates that the Curve founder is selling tokens via OTC transactions to alleviate loan interest pressures on Fraxlend while addressing on-chain liquidity issues.

Fraxlend Loan Position

As of 02:15 PM on August 01, 2023, Egorov's loan position on Fraxlend has a health rate of 1.66, with $27 million in CRV collateral and $12 million in FRAX debt.

Updates on August 01, 2023

Egorov's positions on Abracadabra are also being deleveraged. The latest move involved repaying 1 million MIM to withdraw $2.5 million.

In a recent move, Justin Sun withdrew 2 million USDT from Aave and conducted an OTC transaction with Egorov to help mitigate on-chain pressure.

Additionally, prominent organizations and individuals in the crypto industry have engaged in OTC deals with Egorov, trading 39.25 million CRV, equivalent to $15.8 million.

Updates on August 02, 2023

According to LookonChain, Egorov sold an additional 12.5 million CRV on August 02 through OTC agreements, securing stablecoins to further reduce his DeFi protocol debt to $82.6 million.

In total, Egorov has sold 57 million CRV OTC, raising approximately $26.8 million.

Conclusion

These strategic OTC sales are part of Egorov's efforts to manage and reduce his loan positions amid the liquidity crisis, demonstrating the complex dynamics at play in the DeFi space and the necessity for proactive measures to prevent liquidation and maintain stability.