Curve Finance Proposes 10% CRV Burn Amid Liquidation Crisis

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As an analyst with a background in DeFi and cryptocurrency markets, I have closely followed the recent developments at Curve Finance regarding the proposed 10% CRV token burn. The liquidation crisis that occurred recently, resulting in large loans being liquidated and causing significant market volatility, is a concerning issue for the entire decentralized finance (DeFi) community.

As a researcher studying the cryptocurrency market, I’ve come across an interesting development with Curve Finance. Lately, this decentralized finance (DeFi) platform has faced a significant liquidation crisis that negatively affected its CRV token market. In response to this issue, the founder of Curve Finance, Michael Egorov, has proposed a solution: burning 10% of the total CRV supply.

As a crypto investor, I’m taking this action to halt the recent 30% plunge in the token price.

Curve Finance Plans 10% CRV Burn

Michael Egorov proposes a solution to stabilize the market amidst the liquidation crisis by destroying 10% of the existing CRV supply. This move aims to regulate the CRV token’s price and lessen the impact on users.

Egorov announced on X, previously known as Twitter, that it’s essential to maintain trust and a steady platform in the marketplace.

The Curve Finance team and I have been diligently addressing the liquidation risks that arose recently.
Several people know that I recently paid off all my outstanding loans due to the size of my positions becoming unwieldy in the markets, resulting in approximately $10 million in losses, primarily in the CRV market.
— Michael Egorov (@newmichwill) June 13, 2024

Egorov has mentioned that he has settled 93% of his debt and plans to clear the remaining balance shortly. He aspires that these actions will mitigate any further damage for those affected by the situation. To motivate community members, those who actively participate in the burn proposal vote will receive a 3-month higher annual percentage yield (APY) bonus on all their deposits within the platform.

Details of the Michael Egorov Liquidation

When the price of CRV tokens plummeted from $0.35 to $0.23, Egorov’s loans secured by these tokens, totaling $95.7 million in stablecoins, were forcibly liquidated on various Decentralized Finance (DeFi) platforms due to the significant drop in value.

Approximately $10 million worth of debts turned out to be non-recoverable in this scenario, primarily affecting the CRV segment on Curve.fi.

On July 31, 2023, Michael Egorov found himself in a predicament after #Curve was attacked and he had pledged an excessive amount of CRV as collateral for borrowing stablecoins. Consequently, he was compelled to sell off his CRV holdings through Over-The-Counter (OTC) channels to settle the loan repayment.
He sold a total of 156.35 $CRV for $62.5M at a price of $0.4 through OTC.
— Lookonchain (@lookonchain) June 13, 2024

Egorov’s holdings were distributed across five separate accounts on various protocols, including Llamalend, UwU Lend, Fraxlend, and others. The liquidations amounted to 20.2 million CRV on UwU Lend and 10.58 million CRV on Fraxlend. Based on data from blockchain analysis firm Arkham, these liquidations could occur if the CRV price continues to drop.

Previous Financial Maneuvers

Egorov has previously encountered financial difficulties linked to his CRV investments. During the previous year, there was a major incident on Curve where Egorov was implicated. Fortunately, influential figures within the Decentralized Finance (DeFi) sector stepped in and prevented him from undergoing liquidation.

In this occasion, NextGen Venture Partner Christian Seale provided Egorov with a $6 million USDT (Tether) loan to help clear over $1 million worth of outstanding debts from two of his accounts on Curve’s Llamalend.

Currently, the price of Curve DAO Token (CRV) is at $0.2932, representing a 20.30% decrease. Simultaneously, CRV’s market capitalization has dropped by 18%, now standing at $371,047,573. In contrast, the token’s trading volume has significantly increased by 932%, reaching $763,010,076 within the past 24 hours, as investors take advantage of the price drop to buy more CRV.

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2024-06-13 22:16