Curve’s founder suffered an enormous CRV liquidation after borrowing $95.7 million worth of stablecoins against the asset.
Michael Egorov, the founder of Curve Finance, claims to be more committed to building Curve than ever despite having an enormous stash of CRV liquidated in recent days.
On June 13, Egorov revealed he is now predominantly exposed to CRV through vote-escrow (ve) CRV tokens, motivating him to work towards the project’s development through game theory incentives. The comments come after Egorov lost more than 100 million regular CRV tokens to margin calls
“In case anyone is wondering, I am committed to building Curve more than ever, thanks to game-theoretical implications of veTokenomics (mostly have veCRV now),” Egorov tweeted.
Curve’s founder added that he plans to work towards ensuring that the protocol’s lending and borrowing products are “the safest in the industry,” educating arbitrage traders on how to execute orderly liquidations, and designing mechanisms incentivizing users to deposit crvUSD — Curve’s native stablecoin — into the protocol.
VE tokenomics
VE tokens are non-transferable assets issued in exchange for locking up a project’s governance power. VE-tokenholders receive governance power proportional to the time duration that their tokens are locked up for, allowing them to vote on how new token emissions are allocated.
This mechanism famously gave rise to the “Curve Wars” in 2021, where DeFi protocols competed to allocate CRV rewards to Curve liquidity pools for their respective assets, in turn attracting liquidity from liquidity providers (LPs).
Liquidated, but not rekt?
On June 12, Arkham Intelligence, an on-chain intelligence platform, flagged that Egorov would soon face liquidation should the price of CRV fall another 10% after posting heavy losses over the preceding week. Arkham said Egorov had previously taken out $95.7 million worth of stablecoin loans backed by $141 million worth of CRV.
On June 13, Lookonchain, an on-chain analytics provider, posted that Egorov’s positions had entered liquidation after a further 20% decline in the price of CRV over 24 hours. Lookonchain said Egorov’s positions had been reduced to just $33.9 million worth of CRV backing $20.6 million worth of loans.
The price of CRV is currently down 36% in seven days, but bounced 14% in the past 24 hours following Egorov’s liquidation. CRV is also down 66% since mid-March.
However, despite suffering a massive liquidation, many onlookers believe Egorov was not adversely affected by the margin calls.
“Michael did not get ‘rekt’ by being liquidated on his CRV,” tweeted Eric Conner, an Ethereum developer. “He got $100mn in stables out of a $140mn CRV position. Selling it on market would have resulted in similar prices and a pissed community.”
“He just transferred the rektage to the community instead,” replied Anthony Sassano, the host of The Daily Gwei podcast.
Lookonchain posted that Egorov had “already cashed out and bought a mansion in 2023.”
Lookonchain shared on-chain records showing that Egorov transferred $31 million in borrowed USDT to the Bitfinex centralized exchange in April 2023. One month later, the Australian Financial Review reported that Egorov’s wife had purchased a $41 million mansion in Melbourne, with the property situated next door to a home they had purchased for $18.25 million one year prior.
