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The Aave community has approved the proposal to prohibit additional CRV borrowing, with a 100% support rate. The risk management firm Gauntlet proposes the Aave community to block Curve DAO Token (CRV) borrowing to prevent the liquidation risk of Curve Finance founder Michael Egorov’s debt that could trigger a contagion and possibly a DeFi crash.
Aave Community Passes Proposal To Prevent Additional CRV Borrowing
Proposal 286 “Gauntlet Recommendation for CRV LTV -> 0 on Aave v2 Ethereum” was passed unanimously by the community. The proposal received 100% “Yes” votes to block additional borrowing against CRV.
Gauntlet has been looking into the risk profile of Curve Finance founder Michael Egorov. The account borrows roughly $54 million of USDT against $158 million of CRV. However, Egorov is quickly paying off his $80 million debt through OTC sales of CRV tokens. Currently, a loan of roughly $29 million of USDT against $116 million of CRV on Aave is pending, as per DeBank data.
“We recommend setting CRV LTV to 0 to help impede additional borrowing against existing CRV collateral due to the recent decrease in CRV liquidity.”
Curve Finance pools suffered a $61 million hack last week. While the hacker has started to return funds, the DeFi platform decides to drag the exploiter to court as the deadline for the voluntary return of funds has passed.
Meanwhile, Curve Finance founder Michael Egorov is almost halfway to paying off his $80 million debt through OTC sales of CRV tokens. As a result, CRV token price jumped 10% on Saturday.
Also Read: XRP Advocate’s Bold Bet, Counting On SEC Appeal Failure In Ripple Case
CRV Price Looks Weak
CRV price fell 0.50% in the past 24 hours and 5% in a week, with the price currently trading at $0.61. The 24-hour low and high are $0.608 and $0.619, respectively.
The price witnessed recovery but the momentum is now weak. The trading volume also fell 70% in the last 24 hours, indicating a lack of interest from investors.
Also Read: LUNC Proposal To Re-Enable Terra Luna Classic IBC To Cosmos Chain Passed
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