Over the weekend, Michael Egorov, the founder of Curve Finance, executed a remarkable maneuver that caught the attention of the crypto community.
By depositing 38 million Curve DAO tokens (CRV) — equivalent to $24 million — into Aave, the decentralized lending platform, Egorov aimed to bolster his collateral and mitigate potential liquidation risks.
This move is especially noteworthy due to the substantial amount of collateral he now controls, representing a significant portion of the total circulating supply of CRV tokens.
The Significance of Egorov’s Collateral:
As per on-chain analyst Lookonchain, Egorov secured his Aave loan with a staggering 277 million CRV tokens, constituting 32% of the overall circulating supply.
This indicates the pivotal role that major token holders like Egorov play in the ever-evolving DeFi landscape. Such large-scale collateralization efforts are crucial for maintaining stability and mitigating risks associated with potential liquidations.
Egorov’s Loan Details:
According to DeBank’s data, Egorov’s initial loan from Aave amounted to over $64 million in stablecoins. In order to collateralize this loan, he supplied nearly one-third of the total circulating supply of CRV tokens.
This highlights the significant influence wielded by major stakeholders and their impact on shaping the dynamics of the DeFi ecosystem.
Improved Health Rating:
Lookonchain’s report reveals that Egorov’s recent deposit has enhanced the health rating of his position from 1.3 to 1.5. This development holds immense importance since a health rate of one typically triggers liquidation. Currently, Egorov’s position boasts a safer health rate of 1.7, indicating a reduced risk of liquidation.
Risk of Market Disruption:
Given the substantial volume of Egorov’s CRV collateral, a mass liquidation event could potentially cause significant market disruption by triggering a sudden drop in the token’s price.
Automated liquidations are an inherent feature of the DeFi landscape, capable of initiating a cascade effect that leads to price fluctuations until the market stabilizes.