fxstreet.com
- Curve Finance CEO deposited 38 million CRV tokens into AAVE to mitigate liquidation risk.
- Over 30% of CRV’s circulating supply has been staked to fight the risk of price collapse.
- CRV price declined 22.75% in the past week in response to the SEC’s crackdown on cryptocurrencies.
Curve Finance token has been facing heavy sell-off, prompting CEO Michael Egorov to deposit nearly 32% of Curve Finance (CRV) circulating supply into AAVE. The move comes at a time when DeFi and crypto tokens are battling the Securities & Exchange Commission’s (SEC) crackdown on cryptocurrencies.
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Curve Finance battles liquidation risk on AAVE
Curve Finance’s CRV is a utility token for the DeFi protocol and it is used for exchanging stablecoins and other ERC20 tokens.
In its crackdown on crypto exchanges and assets, the SEC listed nearly 63 assets as securities. Curve’s CRV did not make the list and the asset ranks among crypto assets that are not labeled as securities by the SEC. Find the complete list here.
Still, CRV price has been falling rapidly, dropping more than 20% over the last week. To mitigate the liquidation risk, Curve’s CEO deposited 32% of the token’s circulating supply worth $24 million into AAVE. Michael Egorov’s collateral for the AAVE loan is 277 million CRV tokens.
The crypto intelligence tracker Lookonchain identified the wallet tagged as Egorov and shared the findings with 227,500 followers on Twitter.
The founder of https://t.co/KJyxZS1wiW deposited 38M $CRV ($24.5M) into #Aave due to a 16% drop in $CRV price, increasing the health rate to 1.52.
— Lookonchain (@lookonchain) June 10, 2023
He has deposited a total of 290M $CRV ($187M) into #Aave and borrowed $71M stablecoins.https://t.co/WM1nW8JKwU pic.twitter.com/MGvMDmSv5S
Based on the findings, Egorov has bet a third of CRV’s circulating supply to collateralize his large stablecoin loan.
Why Egorov’s move matters?
Egorov’s collateral is massive and a liquidation could disrupt the DeFi ecosystem and trigger a decline in CRV price.
DeFi platforms have built in automated liquidation as a feature and this could result in the collateralized asset losing its value until the market stabilizes.
Therefore, CRV price is at risk of further decline until the health of Egorov’s loan improves and the collateral is no longer at risk of liquidation.
The CRV token’s price is $0.656 at the time of writing. CRV price nosedived by 22.75% since June 5, based on data from TradingView.