Review of the CRV Bull-Bear Battle: The Largest Short with $63 Million in Collateral Liquidated

Author: Karen, Foresight News

The CRV long and short battle came to a temporary halt as the CRV short address starting with 0x57e was liquidated on-chain for over $63 million, with most CRV borrowing positions being liquidated. In summary, the address starting with 0x57e deposited approximately over 63 million USDC in the past 10 days and borrowed a total of over 94 million CRV, part of which was sold on-chain, while some were transferred to OKX, causing the CRV price to drop from $0.7 to as low as $0.4.

Around 21:30 last night and early this morning, during a strong rebound of CRV, the address was liquidated for almost all USDC in Aave.

On the other hand, there are voices claiming that the address starting with 0x57e was aimed at liquidating the CRV collateral positions of the "defender" address starting with 0x7a16. The long and short game between both sides, along with retail investors gathering to short-squeeze, led to the initiation of on-chain liquidations. According to DeBank data, as of now, the defender address starting with 0x7a16 has supplied over $77 million worth of more than 120 million CRV and 5,590 ETH in Aave, with liabilities of 32.66 million USDC, and a health factor (collateral amount * liquidation line / borrowed assets) of 1.62.

Source: DeBank

However, at the same time, Aave also generated bad debts of 2.64 million CRV (approximately $1.6 million). Whether this CRV conflict was a feint or a manipulation of the long-tail asset risk in the Aave system remains unknown. Nevertheless, the Aave community has begun discussing solutions to reduce the risk of manipulation of long-tail assets, such as lowering the liquidation threshold, reducing the loan-to-value ratio (LTV), or pausing deposits and withdrawals for low liquidity assets during similar events and reducing the LTV to 0.

Coincidentally, at 1 AM today, Curve's native stablecoin crvUSD also released its white paper and code, one important feature being the lending liquidation AMM (LLAMMA) new algorithm, designed to protect borrowers whose collateral assets fall below the liquidation line. In crvUSD, once a user initially borrows collateral, their portfolio will have a balance composed of 100% of that collateral. If LLAMMA observes that the price of that collateral is falling, it will automatically liquidate the portfolio into crvUSD. If the price rebounds, the collateral will be repurchased. In other words, this process is not an instantaneous liquidation but occurs smoothly within a continuous range.

Here are the CRV long and short battle activities of the address starting with 0x57e and the defender address starting with 0x7a16 over the past 10 days.

On November 13, 13:21, the address ponzishorter.eth redeemed 38,956,974 USDC from Compound.

On November 13, 13:23, ponzishorter.eth transferred 38,956,974 USDC to the address 0x57e04786e231af3343562c062e0d058f25dace9e.

On November 14, 01:24, the address starting with 0x57e supplied 38,956,974 USDC as collateral in Aave.

On November 14, 14:06, the address starting with 0x57e borrowed 1 million CRV from Aave and subsequently sold it on-chain in multiple transactions.

On November 14, 14:25, the address starting with 0x57e borrowed another 1 million CRV from Aave and continued to sell it on-chain.

On November 14, 14:57, the address starting with 0x57e borrowed 2 million CRV from Aave and continued to sell it on-chain.

On November 16, 05:13, the address starting with 0x57e continued to borrow 2 million CRV from Aave and began selling it on-chain.

On November 17, 08:16, the address starting with 0x57e borrowed another 2 million CRV from Aave and subsequently transferred over 2.25 million CRV to OKX.

On November 17, 12:11, the address starting with 0x57e borrowed another 2 million CRV and then transferred nearly 3.7 million to OKX.

On November 20, 08:09, the address starting with 0x57e borrowed 5 million CRV from Aave, transferring all to OKX.

On November 20, 9:24 and 9:33, the defender address starting with 0x7a16 supplied a total of 41 million CRV to Aave.

On November 20, 19:56, the defender address starting with 0x7a16 redeemed 45 million CRV from Aave.

On November 22, 13:19, the address starting with 0x57e borrowed 20 million CRV from Aave, transferring all to OKX.

On November 22, 14:12, the address starting with 0x57e supplied over 13.62 million USDC to Aave.

On November 22, 16:16, the defender address starting with 0x7a16 added 20 million CRV as collateral.

On November 22, 16:16, the defender address starting with 0x7a16 repaid nearly 2.2 million USDC to Aave.

On November 22, 16:16, the address starting with 0x57e borrowed another 10 million CRV from Aave, transferring all to OKX.

On November 22, 17:44, the address starting with 0x57e borrowed another 30 million CRV, transferring all to OKX.

On November 22, 18:16, the address starting with 0x57e borrowed 5 million CRV, with part sold on-chain.

On November 22, 18:46, the address starting with 0x57e borrowed another 5 million CRV, continuing to sell on-chain.

On November 22, 19:10, the address starting with 0x57e supplied over 3.62 million USDC to Aave, adding collateral and continuing to sell.

On November 22, 19:12, the address starting with 0x57e continued to borrow 5 million CRV, selling on-chain.

On November 22, 19:21, the address starting with 0x57e supplied over 5.98 million USDC to Aave, adding collateral and continuing to sell.

On November 22, 19:21, the address starting with 0x57e supplied over 1.76 million USDC, continuing to sell.

Between 18:30 and 21:30 on November 22, the CRV price rebounded from 0.4 USDT to a high of 0.64 USDT, a rebound of 50%. Starting at 21:31, the address starting with 0x57e triggered liquidation, with EigenPhi data showing that within 8 minutes from 21:31 to 21:38, the address was liquidated for over $5.65 million in Aave V2.

Source: EigenPhi

On November 22, 21:08, the defender address 0x7a16ff8270133f063aab6c9977183d9e72835428 redeemed 50 million CRV from Aave.

On November 23, 00:29, the defender address 0x7a16ff8270133f063aab6c9977183d9e72835428 redeemed 15 million CRV from Aave.

From around 1:15 to 2:30 on November 23, CRV briefly surged to 0.74 USDT before quickly falling back to below 0.6 USDT. Due to price fluctuations, between 1:22 and 2:10, the address was liquidated for nearly $58 million.

On November 23, 14:41, another address starting with 0xb5C deposited 6 million USDC in Aave and borrowed 3 million CRV, which has already been transferred to Binance.