Curve, the decentralized exchange for stablecoins and a significant player in the decentralized finance (DeFi) sector, has experienced an impressive recovery, with its governance token, CRV, surging by 22% after reaching its lowest point since August 2020. This resurgence follows a recent hack that caused liquidity providers in multiple pools to lose funds.
Whales Step In to Support CRV
The recovery of CRV can be attributed, in part, to strategic interventions by prominent crypto whales who are seeking to mitigate risks in the DeFi space. Meanwhile, Michael Egorov, the founder of Curve and a major holder of CRV tokens, has been actively selling tokens on the secondary market.
Egorov is selling tokens to whales such as Justin Sun, the founder of Tron, as well as venture capitalists and decentralized autonomous organizations (DAOs). Egorov held around 292 million CRV tokens, and he has used a significant portion of them as collateral for his loans.
On-chain data shows that on August 2, Egorov sold 3.75 million CRV tokens to Yearn Treasury and another 1.25 million CRV tokens to Stake DAO Governance through the over-the-counter (OTC) market.
Overall, Egorov has sold 59.5 million CRV tokens to various institutions and investors, resulting in approximately $23.8 million in proceeds. These OTC sales were made at significant discounts, demonstrating Egorov’s efforts to stabilize CRV prices and prevent further negative impact.
Following a hack on July 30, where attackers exploited a re-entrancy flaw to steal funds from various liquidity pools, CRV prices initially dropped by over 12%. The affected pools, including JPEG’d, Alchemix, Pendle, and Metronome, incurred estimated losses of around $70 million. However, reports suggest that white hat hackers intervened, reducing the total impact to approximately $50 million.
As a major player in the DeFi space, the hack and subsequent price drop had repercussions for Curve and decentralized money markets.
Curve’s Role in DeFi and Egorov’s Debt Repayment
Curve currently manages over $2 billion in total value locked (TVL), according to DeFiLlama. One area of concern is Michael Egorov’s $60 million Aave v2 loan, which is primarily backed by CRV tokens. If this loan were to be liquidated, it could potentially create more selling pressure on CRV and lead to further negative consequences, especially for other CRV holders with loans across different protocols.
On-chain data shows that Egorov is taking proactive steps to minimize the risks associated with his large Aave loan collateralized by CRV tokens. He is selling his CRV at a discount through off-market transactions while simultaneously repaying his loan, which appears to be supporting CRV prices.
Overall, the recent recovery of CRV and Egorov’s efforts to repay his debt indicate positive developments for Curve and its governance token.
What is Curve and CRV?
Curve is a decentralized exchange designed specifically for stablecoins, offering low slippage and low fees. CRV is the governance token of the Curve platform.
What caused the recent price drop of CRV?
CRV prices dropped after a hack that exploited a flaw in the Curve platform, leading to losses in multiple liquidity pools.
Why is Egorov selling his CRV tokens?
Egorov is selling his CRV tokens to repay his Aave loan, which is primarily backed by CRV as collateral. This is done to minimize the risk of forced liquidation.
How is Egorov’s debt repayment impacting CRV prices?
Egorov’s debt repayment efforts, including selling CRV tokens at a discount, are helping stabilize CRV prices and prevent further negative impacts on the token.
What is the current state of Curve’s total value locked (TVL)?
Curve manages over $2 billion in TVL according to DeFiLlama.