---
title: "Curve Finance founder’s $100M debt could trigger a DeFi implosion: Report"
url: https://diffcoin.com/curve-finance-founders-100m-debt-could-trigger-a-defi-implosion-report/
description: "While Curve Finance is still weathering the aftermath of the recent $47 million hack, another issue concerning holders of the decentralized finance (DeFi)…"
published: 2023-08-01
updated: 2023-08-01
author: "Mila"
site: "Diffcoin"
---

# Curve Finance founder’s $100M debt could trigger a DeFi implosion: Report

While Curve Finance is still weathering the aftermath of the recent $47 million hack, another issue concerning holders of the decentralized finance (DeFi) protocol’s token has surfaced on the internet, sparking theories on how a massive dump can potentially happen.

On Aug. 1, crypto research firm Delphi Digital published a Twitter thread detailing the loans taken by Curve Finance founder Michael Egorov that are backed by 47% of the circulating supply of Curve DAO (CRV). According to the research firm, Egorov has around $100 million in loans across various lending protocols backed by 427.5 million CRV.

> 1/ Yesterday, several [@CurveFinance](https://twitter.com/CurveFinance?ref_src=twsrc%5Etfw) pools were exploited.
> 
> Curve founder, Michael Egorov, currently has a ~$100M loan backed by 427.5m [$CRV](https://twitter.com/search?q=%24CRV&src=ctag&ref_src=twsrc%5Etfw) (about 47% of the entire CRV circulating supply).
> 
> With [$CRV](https://twitter.com/search?q=%24CRV&src=ctag&ref_src=twsrc%5Etfw) down 10% over the past 24 hours, the health of Curve is in jeopardy. ⬇️ [pic.twitter.com/EKpQCkDs6W](https://t.co/EKpQCkDs6W)
> 
> — Delphi Digital (@Delphi_Digital) [August 1, 2023](https://twitter.com/Delphi_Digital/status/1686187959303708672?ref_src=twsrc%5Etfw)

On Aave, Egorov has 305 million CRV backing a 63.2 million Tether (USDT) loan. Delphi Digital noted that at a liquidation threshold of 55%, the position is eligible to be liquidated at $0.3767. At the time of writing, CRV trades at around $0.5975. This means that a 36% drop could potentially trigger a liquidation.

On Frax Finance, Egorov has 59 million CRV backing a debt of 15.8 million Frax. While the amount is lower, Fraxlend’s time-weighted variable interest rate makes the loan more risky. The loan is currently at 100% utilization, and because of this, the interest rate for the loan doubles every 12 hours. While the interest rate is only 81.2%, Delphi Digital said that it can go up to 10,000% in just 3.5 days. This can lead to liquidation regardless of the price of the CRV token.

***Related:*** ***Ethical hacker retrieves $5.4M for Curve Finance amid exploit***

Recognizing the risks, Egorov has already made moves to lower the debt and utilization rate by paying a total of 4 million FRAX in the last 24 hours. However, as soon as Egorov pays, users are quick to remove liquidity.

To combat this, Egorov deployed a Curve pool to incentivize liquidity toward the lending market. The pool gained $2 million in liquidity just 4 hours after its launch and decreased the utilization rate from 100% to 89%.

> [pic.twitter.com/UWKVYZO9gn](https://t.co/UWKVYZO9gn)
> 
> — Chago0x (@chago0x) [July 31, 2023](https://twitter.com/chago0x/status/1686136067353628672?ref_src=twsrc%5Etfw)

Various community members commented on the situation with some [comparing](https://twitter.com/julianhosp/status/1686266306440654848) it to FTX founder Sam Bankman-Fried using FTT as collateral and others [describing](https://twitter.com/AutismCapital/status/1686251750632853504) it as a “black eye for the industry” that could set the industry back by a few years and spooking those who were considering dipping their toes in DeFi.

Cointelegraph reached out to Michael Egorov but did not get an immediate response.

***Magazine:*** ***Should crypto projects ever negotiate with hackers? Probably***

[Source link](https://cointelegraph.com/news/curve-finance-founder-100-million-debt-could-trigger-defi-implosion)