Curve Founder Faces Potential Liquidation of $150 Million CRV Collateral

As the crypto market continues to experience significant declines, Curve founder Michael Egorov finds himself at the center of attention once again, facing the potential liquidation of up to $150 million worth of CRV collateral.

Curve Founder Faces Potential Liquidation of $150 Million CRV Collateral

As Coin68 reported, the crypto market has seen severe drops over the past two days, leading to the liquidation of over $800 million.

Not only have long positions on centralized exchanges (CEXs) been liquidated en masse, but the threat of liquidation also looms over positions on decentralized exchanges (DEXs) and lending platforms.

The most prominent risk of liquidation is with the CRV collateral used to borrow stablecoins by Curve's founder, Michael Egorov.

Back in August 2023, hundreds of millions of dollars worth of CRV collateral belonging to Michael Egorov were on the brink of liquidation, forcing him to sell CRV OTC to raise funds to "save" his positions.

This event shook the community and subjected the DeFi founder to severe criticism.

Since last August, the crypto market has surged, pushing CRV prices higher and seemingly causing the community to forget about Egorov's vulnerable positions.

However, with the current significant downturn, CRV is trading around $0.43, marking a 43% decline over the past 30 days.

CRV/USDT 4-hour chart on Binance as of 12:20 PM on 14/04/2024

Consequently, Egorov's borrowing positions have once again become a focal point of community concern.

Analysts indicate that Egorov currently has five wallet addresses using CRV as collateral across six lending platforms. In total, he has collateralized 371 million CRV tokens, worth approximately $156 million, to borrow $92.5 million in stablecoins.

The health indicators of these positions have now fallen to 1.1, an extremely risky level. If CRV's price drops another 10% without additional collateral being added, these positions will be liquidated.

In simpler terms, the Curve founder will face nearly total liquidation of his $156 million collateral if CRV's price falls to around $0.37.

It's also worth noting that CRV tokens sold OTC to whales were around $0.4. If CRV drops to $0.4, these whales may offload large quantities of CRV on the market to avoid losses.

Large sell-offs from major positions will further push CRV prices down, increasing the likelihood of a decline to around $0.37.

Given the current situation, what should Michael Egorov do?

1. Continue selling CRV OTC as he did previously to raise more funds to bolster his positions.
2. If Egorov has other idle assets, he could deposit available stablecoins to secure his positions. However, this would require nearly a hundred million dollars in "idle" funds.
3. Do nothing and hope that CRV does not fall to the liquidation threshold.

The community eagerly watches to see how Egorov will navigate this precarious situation amidst the ongoing market volatility.