Tron's Justin Sun Acquires 5M CRV Tokens to Support Curve Finance Amid Bad Debt Situation
Justin Sun, the founder of the Tron blockchain, has taken action to aid the decentralized exchange Curve Finance in its bad debt situation. Sun purchased five million Curve tokens (CRV) from an address labeled "Curve.fi Founder" at an average price of $0.4 through an over-the-counter transaction, totaling $2 million, paid in Tether (USDT). Notably, the acquisition was below the current trading price of CRV, which stands at $0.59.
In a Twitter statement, Sun revealed that he collaborated with Curve Finance founder Michael Egorov to introduce an stUSDT pool on the decentralized exchange. This move aims to enhance user benefits and support the platform. Sun expressed excitement in assisting Curve Finance and reaffirmed his commitment to providing support whenever needed.
The purchase of CRV tokens by Justin Sun comes in the context of concerns regarding the risk of liquidating Michael Egorov's $100 million loans, which could potentially cause turmoil in the DeFi ecosystem. These concerns were triggered by an exploit that impacted several Curve Finance pools using the Vyper smart contract programming language for the Ethereum Virtual Machine. As a result of the attack, over $47 million was lost, leading to a decline in CRV's price.
According to crypto research firm Delphi Digital, Egorov's loans are backed by 47% of all CRV in circulation, totaling 427.5 million tokens. He borrowed 63.2 million USDT on Aave and pledged $305 million worth of CRV as collateral. Additionally, he supplied 59 million CRV against 15.8 million FRAX debt on Frax Finance.
The risk of liquidation for Egorov's loans is significant, with his Aave position having a liquidation threshold of 55%, triggering liquidation if CRV's price falls to $0.37. The Frax debt is also considered riskier due to its time-weighted variable interest rate.
In an effort to mitigate the risk of his debt spiraling out of control, Egorov deployed a new Curve pool for FraxLend's CRV/FRAX market, offering 100,000 CRV rewards.
Given Justin Sun's acquisition of CRV tokens and his collaboration with Egorov to introduce the stUSDT pool, the DeFi community is closely monitoring the situation. The move represents an attempt to stabilize the bad debt situation and safeguard the broader DeFi ecosystem from potential implications.
As the DeFi space continues to evolve, such events highlight the importance of collaborative efforts and timely interventions to address challenges and ensure the stability and growth of the decentralized finance sector.