Approaching the liquidation line, the current position status of Curve's founder with 170 million USD
The loan position health coefficient of Curve's founders has declined across all platforms.Original: Delphi Digital Long Tweet
Author: Crypto research institution Delphi Digital
Compiled by: Leo, Bob, BlockBeats
Michael Egorov, the founder of Curve Finance, has been a well-known player in "lending and cashing out." Egorov frequently engages in CRV collateral and stablecoin lending on Aave and Frax. However, recently, due to the decline in CRV prices and the utilization of his pools, CRV prices have plummeted. As of the time of writing, the CRV price is approximately $0.5, with a 24-hour drop of over 20%, leading to a significant increase in the risk of liquidation for Egorov's CRV collateralized loans. Delphi Digital has published an article titled "The Impact of Curve Founder’s Loan Liquidation Price and CRV Plummet on the Entire DeFi Space," which BlockBeats has compiled as follows:
Yesterday, several Curve Finance pools were utilized, and Curve founder Michael Egorov currently has a loan of about $100 million, secured by 427.5 million CRV (approximately 47% of the total circulating supply of CRV). With CRV dropping 10% in the past 24 hours, the health of Curve is in jeopardy.
On the lending protocol Aave, Egorov has $305 million in CRV backing a $63.2 million USDT loan.
With a 55% liquidation threshold, his position will be liquidated when CRV reaches a price of $0.3767 USDT.
At the current CRV price, reaching the liquidation threshold only requires a drop of about 33% in the CRV price. Additionally, Egorov is paying an annual 4% APY on this loan.
On Frax Finance, Egorov currently holds 59 million CRV, corresponding to a $15.8 million FRAX loan.
Although this is much less than his CRV collateral and stablecoin lending on Aave, the time-weighted variable interest rate of Fraxlend still poses significant risks for CRV.
At the current 100% utilization rate, the interest rate will double every 12 hours.
The current interest rate is 81.20%, but it is expected that the APY will peak at nearly 10,000% in 3.5 days.
Regardless of how the CRV price fluctuates, this exponential interest rate could ultimately lead to his liquidation. With a maximum LTV of 75%, the liquidation price of his position within 4.5 days is $0.517 (CRV), only a 10% drop from the current CRV price.
Egorov has attempted twice to reduce his debt and utilization, repaying a total of 4 million FRAX (3.5m, 500k) in the past 24 hours. However, the market utilization rate remains at 100%, and users quickly removed liquidity after he repaid.
Given the current low liquidity, these large risk positions pose a serious concern for the CRV price.
Currently, there is about $10 million in CRV liquidity on-chain, and there are sell orders on Binance with a depth of -2% amounting to $370,000.
The scale of these risk positions could reach eight figures.
Therefore, the CRV price could potentially plummet to extremely low levels, triggering a chain reaction across much of the DeFi ecosystem.
Today, Curve founder Michael Egorov deployed a new Curve pool and threshold: a pool consisting of crvUSD and Fraxlend's CRV/FRAX LP tokens, injecting $100,000 in CRV incentives.
This CRV/FRAX LP token is the same liquidity he borrowed on Fraxlend and represents the greatest risk he faces in potential liquidation.
This is an attempt to incentivize liquidity into the lending market to reduce utilization and mitigate the risk of uncontrolled debt.
Within 4 hours of launch, the pool attracted $2 million in liquidity, reducing the utilization rate to 89%.
We will actively monitor the situation in this topic post, so be sure to bookmark it.
Delphi members can get the latest updates through the latest Alpha Feed post by Eason Wu, which can be seen here.
larry0x has also compiled some charts we want to share.
It is worth noting: these charts assume that positions do not change (no additional collateral or debt repayment), CRV prices do not change, and utilization remains at 100%.
Interest Rate vs. Time (Hours)
Debt (Million USD) vs. Time (Hours)
Health Factor vs. Time (Hours)
Liquidation Price (USD) vs. Time (Hours)
