Curve Finances Founder Claims $10M Debt Repayment Amid Liquidation Crisis
- Due to a short spike in borrowing costs, Egorovs holdings resulted in soft liquidation.
- Egorov was facing a liquidation of $140 million at the height of the crisis.
In response to the $10 million in bad debt that arose from soft liquidations after a hacking attempt on June 13, Curve Finance founder Michael Egorov has announced that he has completely repaid the loan.
As a result of the event, Egorov went on social media to clarify, saying that the markets couldnt manage the amount of his holdings, which resulted in $10 million in bad debt. He then claimed to have paid off 93% of the debt.
Significant Risk
Due to a short spike in borrowing costs, Egorovs holdings resulted in soft liquidation after the June 13 hack attempt. Because of his stablecoin debt of $95 million and the $60 million yearly charge he had to pay to keep his positions open, Egorov was facing a liquidation of $140 million at the height of the crisis.
Even more importantly, the event caused Curves token, CRV, to drop by 28%. In order to stabilize the token price, the Curve founder proposed burning 10% of CRV tokens, which is worth $37 million. To encourage voters to support the campaign, he promised higher APY.
The new problem at Curve has brought up old worries about the dangers that Egorovs debt situations bring to the platforms viability, which were first raised in a research by Delphi Digital in 2023. Egorov has borrowed $100 million over many DeFi protocols, according to the source, and this might cause DeFi to collapse.
A borrowers health as a debtor is eroded and their finances are gradually liquidated using the soft liquidation process. The system will end the loan and execute a hard liquidation of the borrowers assets whenever their health reaches 0%.
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Read more: https://thenewscrypto.com/curve-finances-founder-claims-10m-debt-repayment-amid-liquidation-crisis/
Text source: TheNewsCrypto – Blockchain & Cryptocurrency News M
