A huge CRV (Curve Finance's token) leveraged position has attracted widespread attention in the industry.
The owner of this position is Michael Egorov, co-founder of Curve Finance.
He used $176 million worth of $CRV in his wallet as collateral in exchange for $60 million in stablecoin debt.
These CRVs are mainly pledged on the Aave platform, which is currently the largest decentralized finance (#DeFi ) lending platform.
Recently, the well-known risk management company Gauntlet issued a warning, suggesting that Aave freeze the CRV market on its platform.
This is because Aave may need to liquidate this position if the price of CRV drops further.
But because the size of this position is so large, Aave may have difficulty liquidating it, and may be burdened with bad debts. The liquidation process is usually like this: first, the liquidator needs to repay the borrowed assets (here is USDT), and then, they can get CRV as collateral at a lower price.
However, Egorov’s staked CRV accounts for more than a third of the token’s total circulation, so if all of his positions are liquidated, it may be difficult for liquidators to profit from selling CRV due to insufficient on-chain liquidity.
While Gauntlet's warnings may cause some concern, others think the fears are overblown.
Andrew Thurman, former communications director at data provider Nansen, and Aiham Jaabari, co-founder of another lending protocol, Silo Finance, both said they believed Egorov was likely to repay his debts.
Overall, this is an issue that needs to be closely watched as it could have significant implications for the DeFi space.
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