Defi Creditors Moves To Reduce Contagion From Michael Egorov’s Debt

Latest update on the Curve Finance says that lenders are taking precautions to protect their assets following the recent hacking event that attacked the Decentralized Finance (DeFi) platform Curve Finance, which put tens of millions of dollars in loans taken out by Curve Finance founder Michael Egorov at risk.

The report states that Egorov had pledged CRV, Curve Finance’s native token, as security with lenders on popular platforms like Aave, Fraxland, and Abracadabra. News has it that the hack had badly effected lenders who gave loans to Egorov in addition to Curve Finance and its users.

The Decentralized Autonomous Organization (DAO): an organization that is in charge of the Curve Finance project, has been urged to freeze the CRV loan market on the platform as a means of preventing further damage from the attack, this came as a formal recommendation made by the cryptocurrency risk modeling company Gauntlet.

According to Gauntlet’s analysis, the liquidation price for Egorov’s loans on Ave is predicted to be $0.368, while CoinGecko’s data reveals that the price of CRV has decreased by 4.8% to $0.58. The already delicate situation has been further strained by this price fall.

According to blockchain data from tracker DeBank, Egorov has started making payments for his positions, which had risen to more than $100 million just a day earlier. However, the magnitude of potential losses and their effects on lending platforms are still unknown.

DeFi institutional asset management platform Hashnote founder and CEO Leo Mizuhara raised worries about the consequences of the attack. He stressed the necessity for lenders and DeFi platforms to improve their risk management techniques and provide strong safety nets to guard against circumstances similar to this in the future.

Defi Community Commence Damage Control, Watches Progress

It was also gathered that the DeFi community has been closely monitoring the hack’s advancements and attempts to contain the damage. Discussions about the proper response to such incidents are expected to start after the CRV lending market is scheduled to be frozen.

The DAO function, based on a decentralized decision-making process, is working on an established consensus on actions that protect the platform and its users while upholding the principles of decentralization. Analysis by BNN Bloomberg’s Muyao Shen has said  that the “process, though doable, can be tough.”

Shen also added that it would be important for all parties involved, including lenders, borrowers, and cryptocurrency platform owners, to work together to find the most suitable action. Meanwhile, further investigation through a social media survey on major cryptocurrency communities revealed that market participants and stakeholders are closely monitoring the response to this incident and the measures taken to prevent similar occurrences.

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