Mortgage nearly $190 million in CRV, is Curve's founder "cashing out" or "reluctant to sell"?
How much money was borrowed and where was it spent?Written by: Frank, Foresight News
On-chain data shows that due to the recent drop in CRV prices, Curve founder Michael Egorov deposited 38 million CRV (worth 24.5 million USD) into Aave yesterday to reduce his lending liquidation risk.
In this article, Foresight News will provide a brief overview of how much CRV the Curve founder has currently collateralized in Aave, how much he has borrowed, where the funds have gone, and what potential impacts this may have on the market.
How much has he borrowed from Aave?
According to DeBank data, as of the time of writing, Curve founder Michael Egorov has deposited over 1.8 million USD worth of assets into Aave V2, primarily consisting of 277 million CRV (approximately 178 million USD).
He has borrowed 64.23 million USDT from Aave V2, and the health factor of this address in Aave V2 is currently 1.68.
Additionally, he has deposited over 14.1 million CRV (approximately 9.09 million USD) into Aave V3 and borrowed about 2.78 million USDT and 743,000 USDC.
The health factor of this address in Aave V2 is currently 1.68.
In summary, as of now, the Curve founder has deposited 291 million CRV (187 million USD) into Aave and borrowed approximately 67.75 million USD in stablecoins.
Where did the borrowed money go?
According to Lookonchain data monitoring, the funds that Curve founder Michael Egorov has historically borrowed through Aave are mainly divided into three destinations:
37.7 million USDT deposited into Bitfinex;
51 million USDC transferred to Wintermute Trading;
1,420 USDT used to purchase ETH and USDC during the USDC depegging period;
First, he deposited a total of 37.7 million USDT into Bitfinex, of which 31 million USDT was transferred between April 10 and April 14, during which Bitcoin's price rose from 28,000 USD to over 30,000 USD. If held until now, it would still be at a loss.
From June to September 2021, he also transferred 4.74 million USDT to an address starting with "0xb10f," mainly to provide liquidity for Curve, and deposited a total of 4 million USDT into Kraken.
Since May 17 of this year, he has cumulatively transferred 51 million USDC to Wintermute Trading through an address starting with "0x9660."
Additionally, during the USDC depegging period in March this year, he borrowed 6.8 million USDT to purchase 4,014 ETH at a price of 1,694 USD; and borrowed 7.4 million USDT to purchase 7.8 million USDC at a price of 0.95 USD, which currently appears to be clearly profitable.
"Cash out" or "hold back"?
CoinGecko data shows that the current circulating supply of CRV is 852 million, which means that the 291 million CRV collateralized by Michael Egorov in Aave accounts for 34.15% of the circulating supply of CRV!
For Michael Egorov, holding more than one-third of the circulating supply of CRV without directly selling for profit, but instead using collateral to obtain funds through a lending protocol, seems to be a choice of "holding back" to avoid directly impacting the secondary market with selling pressure.
However, from another perspective, such a large volume of CRV would be difficult to sell smoothly in the secondary market, and Aave's collateralized lending provides a way to "cash out" with minimal impact.
This also means that the 291 million CRV acting as collateral currently resembles a hidden dam, posing a significant threat to both the Curve ecosystem and the Aave protocol. It is worth noting that the CRV long-short battle last November ultimately led to approximately 1.6 million USD in bad debts for Aave.
Therefore, if the market continues to decline, leading to sustained liquidity tightening, once the CRV price falls to the liquidation point, it could likely trigger a chain reaction.
It is even possible that someone may target this large liquidation point for precise ambush (although since the CRV long-short battle, Aave has prohibited users from borrowing CRV, which somewhat reduces the risk of CRV being shorted), as dForce founder Yang Mindao tweeted:
"Aave V2 has no deposit limit, leading to uncontrolled collateral exposure. The only thing that can be done is to increase the borrowing cost of USDT, collateralizing one's own tokens for leverage may seem like holding back, but in reality, it is a form of inducement for shorting."
It is noteworthy that Curve founder Michael Egorov has recently been in a "troubled time" in public opinion:
First, on May 28, media reported that he and his wife Anna Egorova purchased two luxury homes in Melbourne for a total of 41 million USD, covering an area of 4,251 square meters;
Subsequently, on the 9th of this month, three VCs—ParaFi Capital, Framework Ventures, and 1kx—sued Curve founder Michael Egorov for allegedly participating in fraudulent activities and handling business secrets, claiming that he invested 1 million USD in Curve in 2020, after which Michael Egorov deposited these investment funds into Curve's liquidity pool, and the three VCs did not receive CRV tokens or refunds.
