Curve founder Michael Egorov is the largest borrower of CRV tokens, currently borrowing over $100 million worth of stablecoins across four independent DeFi protocols. In contrast, CRV’s on-chain liquidity is less than $50 million. Cryptocurrency data analysis tool Arkham has combed through Egorov’s borrowing history and analyzed the impact of his massive position on the DeFi ecosystem.
As of June 15th, Egorov’s positions are: AAVE: $170 million, CRV: $62 million, USDT; Abracadabra: $46.9 million, CRV: $20.5 million, MIM; Fraxlend: $27.5 million, CRV: $12.6 million, FRAX; Inverse Finance: $15.7 million, CRV: $6.9 million, DOLA.
Egorov’s method is roughly the same for each protocol: provide CRV as collateral, borrow stablecoins using native stablecoins (or AAVE’s USDT), then swap the stablecoins for USDT/USDC, and finally cash out. Since April 2023, Egorov has sent $32 million of USDT to Bitfinex!
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Currently, Egorov has borrowed over $100 million in stablecoins across the four protocols, all backed by over $260.1 million in CRV. For reference, the largest on-chain source of CRV liquidity, the Curve CRV pool, has only $44.5 million in TVL. This means that if the price of CRV drops enough to trigger liquidation, MEV bots will have a hard time clearing his debt.
Is this possible? Currently, his loans are healthy. But in the worst case scenario, any protocol that lent Egorov dollars would be in a passive position if bad debt occurred. Therefore, Gauntlet proposes a complete freeze on AAVE’s CRV borrowing. Of course, Egorov could also try to repay the stablecoins to neutralize his position.
Reference: https://twitter.com/ArkhamIntel/status/1669396098958647296
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