NOIDA (CoinChapter.com)— Curve Finance is facing liquidity troubles as founder Michael Egorov grapples with liquidation risks following CRV price drop.
The CRV token’s price dropped by over 25% in 24 hours, currently trading at $0.262. The sudden price decline has put Egorov’s on-chain loans at significant risk, leading to partial liquidations and raising concerns about Curve Finance’s stability.
Egorov’s Liquidation Issues
Egorov has borrowed nearly $95.7 million in debt across multiple DeFi platforms, with nearly 141 million CRV tokens as collateral. The different firms that the Curve Finance founder has borrowed from include Inverse, UwU Lend, Fraxlend, and Curve’s LlamaLend.
The rapid depreciation of CRV recently triggered automatic liquidations, starting with the Curve Finance founder’s positions on Inverse.
The Curve Finance chief attempted to mitigate further risks by repaying some of the borrowed stablecoin DOLA, a debt-backed stablecoin launched by Inverse Finance. However, Egorov’s position remained vulnerable, with a health rate close to the liquidation threshold.
Arkham Finance had predicted that the situation might worsen if the CRV price dropped another 10%. This prediction materialized after the token’s price plunged nearly 39% to a daily low near $0.22 on June 13.
As a result, nearly $23 million worth of CRV collateral was liquidated within hours, reflecting the severe financial strain and risk management challenges Egorov faces. The impact extends beyond Egorov, affecting the overall market sentiment and investor confidence in Curve Finance.
However, a piece of bullish news helped the CRV token regain some of the losses it incurred on Jun 13.
Binance Integration with Arbitrum One and Optimism
Amid these liquidation issues, Binance announced the integration of Curve Finance’s CRV token into the Arbitrum One and Optimism networks. The move aims to enhance liquidity and transaction efficiency for Curve Finance.
By leveraging the L2 Ethereum scaling solutions, Curve Finance hopes to offer users faster and cheaper transactions, likely attracting more users.
Binance’s integration of CRV into Arbitrum One and Optimism offers a potential stabilizing factor for the embattled DeFi platform.
CRV Recovers Some Ground
The Binance news likely helped CRV price recover, though the token remained 19% down on the day. If the downtrend continues, the Curve Finance token’s price will likely drop to the support level near $0.275.
Moreover, the failure of the immediate support level could cause the CRV price to drop to the 0.786 FIB support level near $0.24.
On the other hand, if Curve Finance manages to recover from the founder’s liquidation fiasco, CRV price could rise to the resistance near $0.335. Flipping the immediate resistance could help the token rise to the resistance near $0.38 before paring gains.
The relative strength index for CRV was oversold, with a score of 24.19 on the daily charts. Traditionally, oversold RSI levels hint at impending bullish reversals for a token, but it would be some time before CRV sees anything bullish.
