Benzinga - An intriguing move was made by a wallet believed to be owned by Michael Egorov, the creator of Curve Finance, with the wallet deposited an eye-popping 38 million Curve DAO (CRYPTO: CRV) tokens, valued at around $24 million, into Aave (CRYPTO: AAVE), a decentralized lending platform.
On-chain analyst Lookonchain pointed out that this strategic move over the weekend was executed by Egorov to bolster his collateral, thus diminishing the likelihood of liquidation.
The scale of the collateral is staggering, as Egorov backed his loan on Aave with a whopping 277 million CRV tokens. This stash represents 32% of CRV’s total circulating supply.
Quoting data from DeBank, The Block reported that Egorov took out a hefty loan from Aave that exceeded $64 million in stablecoins.
He used nearly a third of all CRV tokens in circulation as collateral, underlining the influential part that major token holders can wield in the DeFi ecosystem.
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Lookonchain made a remark on the health of Egorov’s collateralized position, stating that his recent deposit boosted the health rating from 1.3 to 1.5.
This enhancement is vital since a health rating of 1 is usually the tipping point for liquidation.
At present, Egorov’s position has a more secure health rate of 1.7.
Considering the sheer volume of CRV tokens that Egorov used as collateral, a widespread liquidation could wreak havoc on the market by causing a steep decline in the token's value.
DeFi platforms inherently carry out automated liquidations, and these can set off a domino effect.
The value of the collateralized asset could nosedive until the market reaches equilibrium.
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