Last week, DeFi experienced the biggest turning point of this cycle. CRV continued to drop to a low of $0.219, and the founder Michael Egorov’s loan positions were gradually liquidated. According to Arkham, within less than half a day, all of Michael’s loan positions in five protocols were liquidated, totaling $140 million.
Short-term Surge in CRV Price
While CRV’s price has rebounded, the most notable movement is in CVX. On June 17, according to Binance market data, CVX briefly surged to $4.66 before pulling back, with a 24-hour increase of over 90%.
This liquidation was triggered by a vulnerability event in UwU Lend. However, unlike before, Michael did not promptly cover his position when CRV dropped, allowing for a series of liquidations to occur. Because of the size of Michael’s positions, the market could not handle it, resulting in $10 million in bad debt.
To quickly mitigate the adverse effects of accumulating bad debt on the market, on the evening of June 13, Christian, co-founder of the crypto fund NDV and NFT whale, posted on social media that he acquired 30 million CRV from Michael.
In addition to helping Michael repay his debts, Christian stated that the pressure on Curve was due to Michael obtaining liquidity that typical project teams could not. Now that the liquidation is complete, it means Michael has finally exhausted his liquidity, and Christian believes that “there will be no secondary market selling pressure until at least 2028.”
A Good Time to Bottom Fish CRV
This also means that now is a good time to bottom fish CRV, and the market has responded accordingly. According to Binance platform data, when CRV hit a low of $0.219, the CRV/USDT spot trading pair volume reached 463 million (a trading value of $111.5 million) within just one hour, setting a historical record for this trading pair. Meanwhile, CRV also topped the Smart Money 24-hour inflow rankings for two consecutive days.
As the largest stablecoin swap protocol on Ethereum, most DeFi projects rely on Curve, and the Curve protocol remains effective and immutable. Therefore, we have reason to speculate that Michael’s liquidation might signify the beginning of DeFi’s resurgence.
On June 17, Curve Finance officially announced that the funds flowing into veCRV last week were six times the weekly inflation rate. These inflows included direct staking and staking through Convex Finance, Stake DAO, and Yearn. This is the highest weekly inflow of CRV staking in recent years.
As one of the three major protocols that initiated the Curve War, Convex Finance’s TVL at the time of writing reached $1.316 billion, accounting for more than half of Curve’s ($2.285 billion). This means Convex’s tokens are relatively concentrated, and naturally, whales have turned their attention to Convex Finance.
In addition to Christian mentioned earlier, Zoomer Oracle, a member of Kennel Capital, also stated clearly that he bought CVX at $2.05. Zoomer Oracle believes that CRV/CVX is undervalued and that “Convex is Curve’s beta, with a simple 5x potential.”
Curve’s Data Performance
According to Curve data, the current 3 pool trading volume and TVL data are less than one million, implying that mainstream stablecoins are less likely to use Curve for trading. However, Curve’s liquidity can still support smaller stablecoin projects.
Currently, the modular market is gradually emerging, and modularity will lead to an increase in chains. For these chains to sustain their application scenarios, stablecoins might become a necessity. Thus, Curve’s 3 pool can provide liquidity for these stablecoins, especially algorithmic stablecoins. Of course, since Curve’s 3 pool rewards are allocated in CRV, CRV itself needs to have sufficient value.
After the liquidation, Michael stated that this incident might help strengthen Curve’s security measures and loan mechanisms and potentially create better services for users in the coming months. Whether this can truly make the Curve flywheel take off again remains to be seen.
Disclaimer and Risk Warning
This is a press release. CoinDarwin does not endorse or take responsibility for any content, accuracy, quality, advertising, products, or other materials on this page. Images used in this article are for reference only and were provided to us by a third party. CoinDarwin is not responsible for any copyright issues related to the images. If you have any questions or concerns, please contact us. Readers should conduct their own research before taking any action related to the company.
-
-
-
-
-
-
-
-
