Over the weekend, the founder of Curve Finance, Michael Egorov, executed a noteworthy maneuver by depositing 38 million Curve DAO tokens, worth $24 million, into the decentralized lending platform Aave.
This strategic move aimed to increase Egorov’s collateral and minimize the risk of potential liquidation. The scale of collateral controlled by Egorov is particularly remarkable, as it represents 32% of the total circulating supply of CRV tokens.
Large token holders like Egorov play a significant role in the DeFi landscape, as demonstrated by his substantial loan of over $64 million in stablecoins collateralized with an impressive 277 million CRV tokens.
To mitigate the risk of liquidation, Egorov chose to deposit a substantial amount of CRV tokens into Aave. By doing so, he significantly bolstered his collateral, improving the health rating of his position from 1.3 to 1.5.
This crucial development is noteworthy, as a healthy rate of one typically triggers liquidation. Currently, Egorov’s position stands at a safer 1.7 health rate.
The volume of CRV collateral controlled by Egorov raises concerns about potential market disruption. In the DeFi landscape, automated liquidations are inherent features that can trigger a cascade effect, causing the price of the collateralized asset to plummet until the market stabilizes.
With Egorov’s significant holdings, a mass liquidation could potentially lead to a substantial drop in the token’s price.
Egorov’s decision to deposit $24 million worth of CRV into Aave highlights the importance of large token holders and their influence within the DeFi ecosystem.
As demonstrated by the notable collateral he controls, their strategic moves can have far-reaching implications for both individual positions and overall market stability. Egorov’s maneuver serves as a reminder of the intricate dynamics at play in the decentralized finance space.
