Michael Egorov: "Liquidation incident shows that Curve can become the safest lending platform"
Despite the liquidation incident, founder Michael Egorov affirmed that Curve Finance's borrowing/lending mechanism could become the safest platform in the industry.
As Coin68 reported, Egorov's nearly $100 million stablecoin loan collateralized by Curve Finance's CRV token and on various protocols, was automatically liquidated, causing the token price to drop more than 30% on May 13. June 2024.
The cause of bad debt and liquidation is said to originate from UwU Lend - a DeFi protocol that allows users to borrow, lend and stake tokens - which was subject to a security attack causing the loss of nearly 27 million USD. Currently they are offering a reward of 5 million USD ETH to the first person to find the attacker's location.
Curve founder Michael Egorov said:
“UwU Lend has deployed vulnerable code to the new (sUSDe) market and these markets are not segregated, so the entire platform is at risk. UwU was attacked, and the hacker sent the CRV taken from UwU to LlamaLend, which then disappeared with the money, leaving the debt behind in the system.”
Egorov estimates bad debt in a specific CRV loan pool at $10 million. Although this market is completely separate from other lending pools, CRV depositors cannot withdraw their funds as long as bad debt exists.
Despite bad debt and liquidation, Mr. Egorov remains committed to ensuring all users can withdraw funds and making Curve Finance's borrowing/lending products the safest in the industry, according to a statement posted on X (old Twitter) of the founder.
"Yesterday, the system was tested under unimaginable conditions. We have a lot to process, but most importantly we have all the information on how to create the loan service/ The safest and most flexible loan ever."
Was not planned, but fascinating how soft liquidations work on https://t.co/bdUCarOsuM. There are docs at https://t.co/zQjPsRK8lQ (same as for crvUSD).
The system shows a fantastic performance. This gave time for liquidators to prepare funds and OTC-liquidate the hacker's… https://t.co/4nG8BIEush— Michael Egorov (@newmichwill) June 12, 2024
In the latest announcement, the founder of Curve announced that he had repaid his entire position, so "current bad debt is ZERO" - Egorov affirmed.
Gave my comments for the article. In other news, bad debt is ZERO now!
---
https://t.co/9nCgrxARye— Michael Egorov (@newmichwill) June 14, 2024
