- Curve founder Michael Egorov sells off governance tokens to avoid liquidation.
- Top buyer is Tron founder Justin Sun with five million token purchase.
- “We will collaborate with Curve on a stUSDT staking pool,” Sun told DL News.
Tron founder Justin Sun, along with multiple other parties, has made deals to buy CRV tokens from Curve founder Michael Egorov.
“I just want to help Curve Finance and show them support,” Sun told DL News. Sun confirmed he bought five million CRV tokens for $2 million, 32% lower than the current market value.
“We will collaborate with Curve on a stUSDT staking pool so the CRV I bought will be used to vote for the pool,” he said.
Egorov also told DL News that the CRV tokens traded in the deals would be locked for over six months, meaning they cannot be resold or transferred. But he declined to disclose any further details.
On Sunday, Curve Finance was exploited, allowing a hacker to steal over $61 million, a large percentage of which was denominated in the protocol’s governance token, CRV.
The hack weighed on the CRV price, pushing it down over 30% in the aftermath.
Egorov currently has over $100 million in DeFi loans backed by 427.5 million CRV tokens — worth about $252 million — as collateral.
As the CRV price fell, the health of Egorov’s loans fell too. If the value of Egorov’s CRV collateral were to fall further, it could face liquidation — meaning protocols that accepted the CRV as collateral would allow it to be sold on the open market to repay Egorov’s loans and stop them from going into debt.
DefiLlama data shows that for Egorov’s loan on Aave, his CRV collateral would be put up for liquidation if it were to drop to around $0.36 per token, as of this writing.
And with dwindling CRV token liquidity, such an event may have devastating effects not just on the CRV price but on the DeFi space as a whole.
DL News asked Egorov if the over-the-counter deals with Sun and others had helped him stabilise his loans for the foreseeable future.
“I think so,” he replied.
It’s not yet clear who all the other parties Egorov sold tokens to are. Arkham, a blockchain data provider, lists pseudonymous angel investor DCF GOD, Jeffrey Huang aka Machi Big Brother, Cream Finance, and DWF Labs as owners of some of the addresses Egorov sold tokens to.
On-chain data shows Egorov sold a total of 39.5 million CRV tokens.
Sun to promote stUSDT on Curve
In a tweet shortly after his CRV purchase, Sun said he was “excited to assist Curve” and that “our joint efforts will introduce an stUSDT pool on Curve.”
Launched on July 2, stUSDT is the Tron blockchain’s answer to real-world asset DeFi protocols, which let users purchase derivatives of real-world assets such as corporate and government bonds on-chain.
stUSDT is currently the top real-world asset DeFi protocol with over $435 million of deposits.
However, it is not without controversy. Details about how stUSDT works and which real-world assets it invests user’s funds in are sparse.
“stUSDT yields come from government bonds,” Sun previously told DL News, without elaborating further.
CRV holders can vote on which of Curve’s trading pools new CRV token rewards go, which has led to a phenomenon known as the Curve Wars.
Sun said he will create a trading pool for stUSDT and use his CRV tokens to reward users who provide liquidity for stUSDT, incentivising liquidity for new tokens like other DeFi developers do.
Incentivising liquidity for stUSDT will make it easier for DeFi users to trade between it and other tokens. Deeper liquidity means traders can swap more tokens and receive better prices on their trades.
Disclaimer: The two co-founders of DL News were previously core contributors to the Curve protocol.