Curve Finance Founder Michael Egorov Suffers Massive Liquidations

A sharp decline in the price of CRV has caused Michael Egorov, the founder of Curve Finance, to suffer tens of millions of dollars in liquidations after borrowing nearly $100 million in stablecoins backed by Curve’s governance token.

On June 13, Lookonchain, an on-chain analytics team, flagged that Egorov’s collateral across four lending protocols had been reduced to just $33.9 million worth of CRV backing $20.6 million in debts after being forced into liquidation.

According to Arkham Intelligence, an on-chain intelligence firm, Egorov previously used $141 million worth of CRV to back $95.7 million worth of stablecoin loans using the DeFi lending protocols Inverse, UwU Lend, Fraxlend, LlamaLend, and Aave.

On June 12, Arkham noted that $50 million worth of Egorov’s loans were taken out in the form of crvUSD from Llamalend, exhausting the protocol’s crvUSD pool and resulting in annual interest of roughly 120%. Arkham warned that a 10% drop in the price of CRV would place Egorov’s positions in liquidation.

The price of CRV, Curve’s governance token, has crashed by more than 20% in the past 24 hours, according to CoinGecko, triggering many of Egorov’s positions to enter liquidation. CRV is also down 40% in the past seven days.

Egorov also suffered a $5 million liquidation on UwU Lend, while Curve’s founder has made repayments on Inverse to stave off further losses.

The current state of Egorov’s holdings suggests that around 78% of his holdings have been liquidated to pay down his debts so far.

Curve Lend, a lending protocol launched by Curve Finance, has also been severely hit by the recent CRV drawdown.

On June 13, Saint Rat, a pseudonymous Curve contributor, tweeted that the protocol has incurred $11.5 million worth of bad debt, adding that the debt would be cleared if the price of CRV rises to $0.33. CRV last changed hands for roughly $0.28.

Bad debt

The latest episode is not the first time that Egorov has stared down the barrel at hefty liquidations. Last year, $60 million worth of loans borrowed from Aave by Egorov threatened to leave the protocol with bad debt in the event of liquidation.

In June, Gauntlet, a risk management firm, recommended that Aave freeze its v2 CRV market to prevent the token from backing new loans and to minimize risks posed to the protocol. A proposal to freeze the CRV market passed in August 2023.

That same month, Egorov sold 106 million CRV for $46 million in private deals to pay down the majority of his debts on Aave and other lending protocols. Egorov closed out his debt to Aave in September with a deposit of $11 million USDT.