Michael Egorov: "Liquidation Incident Demonstrates Curve Can Become the Safest Lending Platform"

Despite the liquidation incident, founder Michael Egorov asserts that Curve Finance's lending mechanism has the potential to become the safest in the industry.

Michael Egorov: "Liquidation Incident Demonstrates Curve Can Become the Safest Lending Platform"

As previously reported by Coin68, Michael Egorov's stablecoin loan worth nearly $100 million, collateralized with Curve Finance's CRV tokens and across various protocols, was automatically liquidated, causing the token price to drop by more than 30% on June 13, 2024.

The root cause of the bad debt and liquidation is attributed to UwU Lend, a DeFi protocol that allows users to borrow, lend, and stake tokens. UwU Lend experienced a security breach resulting in a loss of nearly $27 million. They are currently offering a $5 million ETH bounty for anyone who can locate the attacker.

Michael Egorov stated:

"UwU Lend deployed vulnerable code for a new market (sUSDe), and these markets were not segregated, putting the entire platform at risk. UwU was attacked, and the hacker sent CRV taken from UwU to LlamaLend, then disappeared with the money, leaving bad debt in the system."

Egorov estimates the bad debt in a specific CRV lending pool to be $10 million. Although this market is entirely separate from other lending pools, depositors in the CRV pool cannot withdraw their funds as long as the bad debt exists.

However, Egorov remains optimistic, viewing the current situation as an opportunity to enhance security measures and lending mechanisms on Curve, ultimately creating better products and services for users in the future.

Despite the bad debt and liquidation, Egorov remains committed to ensuring all users can withdraw their funds and making Curve Finance's lending products the safest in the industry, as stated in his post on X (formerly Twitter).

"Yesterday, the system was tested under unimaginable conditions. We have a lot to address, but most importantly, we have all the information needed to create the safest and most resilient lending service ever."

In his latest announcement, Egorov declared that he has fully repaid his position, stating, "Current bad debt is now ZERO."

The price of CRV tokens has stabilized around $0.27 after dropping nearly 40% to $0.219 on June 13.