According to CoinDesk, the recent exploit of UwU Lend triggered a series of events that led to the automatic liquidation of Michael Egorov's $100 million loans from various protocols. This caused the CRV token to plummet by up to 30%. Despite the bad debt and liquidations, Egorov remains committed to ensuring that all users can withdraw their deposits and is focused on making Curve Finance's lending/borrowing products the safest in the industry.
The exploit of UwU Lend on Monday set off a chain of events that led to multimillion liquidations on DeFi lending giant Curve. Egorov’s $100 million in loans taken from various protocols using Curve’s CRV tokens began to automatically liquidate, sending the token down as much as 30% before it briefly recovered. The catalyst for the bad debt and liquidations has been traced back to UwU Lend, a crypto protocol that allows users to borrow, lend, and stake tokens.
Egorov explained, 'UwU was hacked, and the hacker, as a part of cash-out play, deposited CRVs taken from UwU to lend.curve.fi (LlamaLend) and disappeared with the funds, leaving his debt in the system.' UwU Lend lost $20 million on Monday after being hit by a flash loan attack and another $3.7 million on Thursday in a separate attack. As of Friday, it is offering a bounty reward of $5 million to catch the attackers.
Egorov estimated bad debt in a particular CRV lending pool at $10 million. While this market is fully isolated from other lending pools, depositors in the CRV could not withdraw their funds as long as the bad debt existed. However, Egorov believes that the situation could help bolster Curve’s security measures and loan mechanisms and could create a better service for users in the coming months. 'We have a lot to process, but most importantly we have all the information on how to make the safest and the most resilient lending/borrowing ever existed,' he said.
Curve is among the largest crypto protocols with over $2 billion in locked assets as of Friday, according to DefiLlama data.