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.

CRV Crashes

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, was also severely hit by the CRV drawdown and Egorov's liquidation.

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.

Egorov tweeted that he is working with the Curve Finance team to address the bad debt.

“Many of you are aware that I had all my loans liquidated,” Egorov said. “Size of my positions was too large for markets to handle and caused 10M of bad debt. Only CRV market on [Curve Lend] was affected. I have already repaid 93%, and I intend to repay the rest very shortly. It will help users not to suffer from this situation.”

According to Arkham Intelligence, two of Egorov’s accounts also incurred more than $1 million worth of bad debt on Curve's Llamalend protocol. However, Egorov cleared the debt after selling 30 million CRV tokens to Christian Seale of NextGen Venture Partners for 6 million USDT.

“Just acquired 30M $CRV from Michael Egorov,” Seale tweeted. “Stand with Curve Finance and future of DeFi.”

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.