protos.com
Over $20 million worth of CRV-collateralised positions were liquidated this morning, as the price of the Curve Finance’s governance token dropped by more than 30% in an hour.
Curve founder Michael Egorov was hit hard, with 20 million CRV collateral liquidated on UwU Lend, a decentralized finance (DeFi) platform created by the infamous 0xSifu, a.k.a Michael Patryn.
Egorov’s loans on Inverse Finance (worth $6.5 million) and Silo Finance (worth $14.3 million) were also liquidated.
Read more: Sifu’s UwU Lend reportedly hacked for $20M, Curve’s Egorov among affected
A dashboard by Parsec Finance user @kez shows a total of $22 million worth of CRV liquidations which accompanied a dip in price from around $0.36 to a low of $0.23. CRV is currently worth $0.27, according to data from CoinMarketCap.
In what is known as a ‘liquidation cascade,’ CRV collateral was sold off by liquidation bots, which further depressed CRV’s price, causing additional positions to cross their liquidation threshold.
Mich saga
In the run-up to today’s events, over $140 million worth of leveraged CRV positions were held by Curve’s founder Michael Egorov, collateralizing $95 million of stablecoin loans across five DeFi lending protocols. Blockchain analytics firm Arkham calculated the annualized borrowing cost across the positions at $60 million.
Egorov has long been borrowing stablecoins against CRV to avoid selling his own project’s token on the open market, which would prove wildly unpopular with the community, and would involve significant price impact.
However, the strategy has frequently been criticized as a burden to the Curve community, with the ever-present threat of a liquidation cascade crashing the CRV price looming over holders.
Following last summer’s hack of Curve Finance, Egorov was bailed out by a number of DeFi ‘whales’ in a six-month gentleman’s agreement. In February, when the handshake deal came to term, a number of counterparties seemingly dumped their portion for a modest profit of 10%.
Just three days ago, Egorov was amongst those affected by a $20 million hack on UwU Lend. The loss was down to a faulty oracle and, shortly after the resulting bad debt was repaid, the platform was attacked for a further $3.7 million this morning.
Read more: Curve chief nearly liquidated for $150M in CRV in weekend crypto crash
Before the liquidations began, Egorov had been shilling the ‘soft liquidation’ mechanism on Curve’s LlamaLend based on how the system responded to the UwU attacker’s use of the platform.
Meanwhile, UwU Lend creator and convicted fraudster Patryn has been playing the other side of Egorov’s trade, shorting CRV and withdrawing stablecoin liquidity from Curve’s own lending module in order to push Egorov’s borrowing costs up.
While millions of dollars worth of liquidated collateral would normally spell bad news for a DeFi user, some have pointed out that perhaps this was Egorov’s plan all along.