CRV, the governance token of Curve, a decentralized stablecoin exchange and key player in the decentralized finance (DeFi) space, has made a significant recovery after falling to August 2023 lows this week, up 22%.
As of writing on August 3, CRV is trading at $0.59, having risen double digits after falling to $0.48 on August 1 following a devastating hack that caused liquidity providers across multiple pools to lose funds.
Whales step in to buy CRV
This recovery is mainly attributed to strategic actions taken by well-known crypto whales, who stepped in to mitigate DeFi risks if CRV prices continued to fall. Meanwhile, Michael Egorov, the founder of Curve and one of the largest holders of CRV, has been actively selling tokens in the secondary market.
Egorov is selling to whales like Tron founder Justin Sun, who holds about 292 million CRV and backs his loans with a large portion, as well as other venture capitals and decentralized autonomous organizations (DAOs).
On-chain data shows that on August 2, Egorov sold 3.75 million CRV tokens to Yearn Treasury through the over-the-counter market and another 1.25 million CRV tokens to Stake DAO Governance.
In total, Egorov has sold 59.5 million CRV to various institutions and investors, earning approximately $23.8 million. These over-the-counter sales were at a significant discount, reflecting the founder’s efforts to stabilize CRV prices and prevent further contagion.
In the July 30 hack, attackers exploited a reentrancy vulnerability to steal funds from multiple liquidity pools. Losses suffered by the JPEG'd, Alchemix, Pendle, and Metronome pools were initially estimated to be around $70 million. However, other reports indicate that white hat hackers intervened, reducing the total impact to around $50 million.
CRV price fell more than 12% following this news. Given Curve’s prominence in the DeFi space, this hack and price crash reverberated throughout Curve and DeFi, especially in the decentralized currency market.
Curve is a big player in the DeFi space, and Egorov paid off his debt
According to DeFiLlama, Curve manages over $2 billion in total value locked (TVL). While no impact on other protocols has been confirmed, attention has turned to Egorov’s $60 million Aave v2 loan, which is primarily backed by CRV. If this loan is liquidated, it could mean more selling pressure on CRV, leading to another possible contagion, especially for other CRV holders with loans on different protocols.
Judging from on-chain data, Egorov is taking active steps to reduce the risk posed by a large Aave loan that is overcollateralized by CRV. Egorov aims to minimize the potential consequences of forced liquidation through over-the-counter transactions, selling CRV at a discount while repaying the loan. This in turn seems to support the price.