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Author: Tom Blackstone, Cointelegraph; Compilation: Songxue, Bit Chain Vision Realm
A report by anonymous cryptocurrency investment analyst and X user Defi Made on January 8th,The systemic risk of the CURVE Finance protocol core has not been completely resolved, and the agreement will face the “another stress test” in February.
According to the report,A large number of Curve (CRV) tokens will become available in the next few weeks. The sale of these tokens may lead to “similar situations to August”, and the price of CRV tokens may collapse.However, Defi Made Here also warned that this situation is just a possibility.
According to their brief introduction, Defi Made Here is an analyst at the cryptocurrency investment fund Alphabeth Capital and a consultant to Web3 developer Good Entry Labs.
According to data from the cryptocurrency research company Delphi Digital, as of August 1, Michael Egorov, the founder of Curve Finance, owed various decentralized finance (DEFI) agreements of $ 100 million in debt.The debt is supported by CRV tokens, and critics pointed out that it constitutes risks to the CURVE protocol and the entire DEFI system.However, when CURVE was used at $ 62 million in August, Egorov repaid some of the debt, and the agreement seemed to have spent the storm safely.When the attack occurs, the price of the CRV token is about $ 0.63.According to CoinMarketcap data, the price has fallen to $ 0.55 since then, a decline of 12.7%.
Defi Made Here said in their report that the peace of the market may cover up the potential weakness of the Curve protocol.”$ CRV is a timing bomb,” said analysts.Its ecosystem “Master in the hands of‘ people with problems ’, and Mich repaid its capacity of $ 1.7 million in debt of $ 1.7 million a month [becomes more difficult].”
The analyst claimed that Egorov was “close to liquidation” in August, but he knew that he “could not perform the public commitment to repay debts when necessary.”To cope with this threat, Egorov decided to sell some of his CRV tokens to investors through OTC Transactions (OTC) and repay debts with cash.However, if investors who purchase these tokens sell them to the market, this strategy will not work, so Yegorov insists on reaching a “handshake agreement”, and they will not sell them before February 2024.”$ 231 million CRV sold $ 92 million at a price of $ 0.4, and a handshake agreement stipulates that CRV, which is not allowed to be sold for off -site transactions by February 2024.”
The transaction opponents of the transaction include the Wintermute and DW Labs, the TRON network developer Justin Sun, the web3 developer Jeffrey Huang (known as “Machi Big Brother”) and other cryptocurrency investors.
After Egorov successfully raised a cash repayment loan, people’s confidence in CURVE recovered.However, Defi Made Here claimed that when the Silo Llama protocol was launched in October, Egorov issued $ 75 million in new loans.Silo LLAMA uses Curve’s stable currency CRVUSD as a collateral.According to analysts, about $ 45 million was borrowed from it, and the remaining funds were obtained from Fraxlen and other agreements.
The report said,One of the maximum liquidity providers of these loans is DEFI developer Michael Patryn (called “0xsifu”).Patryn is also “shorting” CRV, and may start to “extract liquidity from the pool and take more CRV” in February for transactions in February.This may once again cause the Curve protocol to be crisis, causing people to worry about Egorov’s loan liquidation and the chain effect of the entire Curve ecosystem.Therefore, the agreement will face another “pressure test” that is coming, as the analyst claims:
“Curve must pass another pressure test in the next few weeks. At that time, the OTCD CRV will become liquid. Unfortunately, the debt of the founder will put a lot of pressure on the health of the entire Curve ecosystem, and it will beA systematic risk. “
However, Defi Made Here also claims that this is just a possibility.Patryn may be a “good actor”.In this case, “he will only repay CRV debt and continue to provide liquidity for [Egorov]. Overseas trading buyers will not do similar things.” This analyst expressed his hope that this optimistic situation would be realized, andAnd “the upcoming event will not damage the Curve, and the CRV design restrictions will make the ecosystem be maintained.”
According to data from the blockchain analysis platform Defillama, CURVE is currently the 17th Defi protocol.Its contracts are locked in crypto assets worth more than 1.6 billion US dollars.
