Michael Egorov, the founder of Curve Finance, recently faced liquidation as the CRV token plummeted to an all-time low of $0.219. On-chain analyst EmberCN reported that Egorov’s lending positions were largely liquidated, totaling around 100 million CRV valued at $27 million. Despite this, he still holds 39.35 million CRV, securing $5.4 million in stablecoins on a lending platform, but these remaining assets are not at immediate risk of liquidation.
Egorov’s situation triggered widespread CRV liquidations across various platforms, although his actions didn’t create direct selling pressure. He reportedly profited quickly in another manner, potentially disadvantaging lenders and former CRV investors. Arkham Intelligence had previously warned that Egorov’s CRV positions worth $140 million across five protocols were at risk of liquidation if the digital asset’s price dropped 10%.
Last year, a hacking event resulted in sharp declines in CRV price, forcing several DeFi protocols to prohibit additional CRV borrowing, citing the contagion risk from Egorov’s actions. Amid the market turmoil, Egorov praised Curve Finance’s soft liquidation mechanism on June 12 for successfully handling a real-world test during the recent UwU lending platform hack. This mechanism allows for multiple liquidation ranges and continuously liquidates collateral if necessary.
Blockchain intelligence platform SoSo Value noted that Curve, as an established DeFi project, is known for its quality and long-term profitability. However, whether Egorov’s recent incident will impact Curve’s standing and reduce community cohesion remains to be seen. Egorov’s borrowing on Curve has disrupted the market before, prompting concerns about contagion risks and potential liquidations across platforms.
The soft liquidation mechanism implemented by Curve Finance has proven to be effective during real-world tests, such as the recent UwU lending platform hack. By depositing collateral into multiple bands across the automated market maker (AMM) and continuously liquidating collateral if necessary, this mechanism helps protect against large liquidation events caused by market volatility. Egorov praised the system’s performance during the hack, noting that it gave time for liquidators to prepare funds and OTC-liquidate the hacker’s position, resulting in no remaining bad debts or funds left.
