- Curve Finance founder faces mounting debt risks due to Fraxlend’s high APY.
- Delphi Digital warns of potential liquidation threat of $100M loan backed by CRV.
- CRV price is down nearly 20% over the week following a 10% decline in 24hrs.
Lookonchain, a renowned on-chain data resource, took to Twitter to highlight concerns regarding Michael Egorov, the founder of the recently exploited pool, Curve Finance. Lookonchain noted that Egorov faces mounting debt issues from the high Annual Percentage Yield (APY) of over 140% on Fraxlend.
According to Lookonchain’s tweet, the founder attempted to address the situation by transferring 10 million of the pool’s native token, CRV, equivalent to $5.9 million, to a new wallet. The founder received $5 million USDT from four different addresses. This transaction raises questions about the possibility of the founder selling CRV through over-the-counter (OTC) deals.
Meanwhile, the situation has caught the attention of Delphi Digital, an Institutional grade research firm. Per Delphi Digital’s report, Curve founder Egorov holds a substantial loan of approximately $100 million backed by 427.5 million CRV. According to the report, the figure accounts for nearly 47% of the total circulating CRV supply.
Furthermore, Delphi Digital highlighted that Egorov also has a $305 million CRV-backed loan on Aave, totaling $63.2 million USDT. Given the liquidation threshold of 55%, the research firm argued that a mere 33% drop in CRV price to $0.3767 could trigger liquidation.
According to data from CoinMarketCap, CRV trades at $0.5938, down by nearly 20% in its cumulative 7-day performance, following over 10% decline in the last 24 hours.
Delphi Digital further noted more troubling concerns about Curve’s founder. It revealed that on Frax Finance, Egorov holds 59 million CRV as collateral against a 15.8 million FRAX debt. While it may be a minor position than Aave’s, the Time-Weighted Variable Interest Rate of Fraxlend reportedly poses a more significant risk to CRV.
The firm estimated that the interest rate is already 81.20% and expected to soar to nearly 10,000% APY in three days. Delphi Digital argued that this astronomic interest rate could lead to Egorov’s eventual liquidation, irrespective of the CRV price.
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