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Curve Founder Michael Egorov Repays $10 Million Debt After Hack Attempt

Michael Egorov, Curve

Michael Egorov, the founder of Curve, said that he has settled the $10 million worth of the bad debt that was incurred as a result of the June 13th’s hacking incident triggered by the soft liquidations. ”The size of my positions was too large for markets to handle and caused $10M of bad debt” Egorov said social media after the incident, he also added that he has already paid 93% of the total debt.

Egorov’s Quick Repayment and Debt Explanation

A brief and temporary increase in the cost of borrowing resulted in soft liquidations of Egorov’s positions after the June 13 hacking attempt. Egorov’s stablecoin debt was at $95 million and the annualized cost of rolling over his positions was $60 million hence he was looking at liquidation of $140 million at the height of the crisis. Egorov proved this dedication to stabilizing the platform by replenishing the entire sum as soon as possible despite the difficulties.

Impact of the Hack on Curve Token and Proposed Remedies

The episode had a considerable impact on the token of Curve, CRV, and the token price dropped by 28%. Egorov proposed to burn out 10 percent of the total $37 million value of CRV tokens to support its price. He also offered higher APY to those who will vote for the measure as their reward as a voter.

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The present issue with Curve has brought back the concerns regarding the risks that Egorov’s credit exposure to the stability of the platform engenders. A study by Delphi Digital in 2023 had indicated that Egorov’s $100 million loans in Defi might lead to the collapse of Defi. Nevertheless, the events that occurred with Egorov and the reactions of the community are aimed at minimizing these risks and enhancing the platform’s robustness.

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Performance of Curve’s Soft Liquidation Mechanism

Even though the Curve platform was highly stressed, the soft liquidation mechanism of LLAMMA functioned as intended. ”The system worked great. This gave the liquidators enough time to execute OTC-liquidate the hacker’s position and get the funds in place.” The system itself is almost without defaults, and there are no funds left for the hacker, everything is as it should be Egorov noted.

The gentle liquidation technique liquidates a borrower in a slow and painless manner by reducing the borrower’s status as a debtor. The system liquidates the borrower and closes out the loan, if her health value equals zero percent. The effectiveness of this mechanism determines the management of the problem and the prevention of more platform destabilizing action.

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