The Aave Chan Initiative, introduced within the Aave governance forum, suggested acquiring $2 million worth of curve tokens (CRV) from Michael Egorov, the founder of Curve.
Spearheaded by Marc Zeller, the creator of Pandemic’s blockchain consultancy firm and a key player in Aave Companies, the initiative is a delegate platform that operates closely with Aave. Zeller’s extensive background includes three years as integration lead at Aave, where he actively participates in enhancing the Aave governance ecosystem.
Aave treasury receives proposal to buy $2 million CRV
According to Zeller, acquiring $2 million worth of CRV, equivalent to 5 million CRV tokens, would be a strong signal of DeFi supporting DeFi. Additionally, it would strategically position the Aave DAO in the Curve Wars, offering benefits to GHO’s secondary liquidity. Zeller suggested locking up the acquired CRV tokens and converting them into veCRV to implement this plan.
VeCRV tokens hold voting rights on the Curve platform, enabling their holders to influence the distribution of token rewards. This approach incentivizes Curve users to provide liquidity for token pairs involving GHO. Zeller emphasized that the most efficient method for voting on Curve Wars would be to convert the tokens into VeCRV, ensuring maximum voting efficiency over the next four years.
Notably, Egorov has been engaging in substantial over-the-counter transactions, selling Curve tokens to various crypto individuals. The founder is persistently selling CRV tokens to strengthen his loan positions after taking multiple loans across various DeFi lending platforms, primarily using CRV as collateral to borrow stablecoins. His borrowing on Aave alone amounts to $56 million in stablecoins, with $149 million worth of CRV as collateral.
Huobi co-founder purchases 10 million CRV
Jun Du, the co-founder of Huobi, acquired 10 million Curve tokens (CRV) for $4 million from Egorov. Initially, Du expressed his intention to buy 10 million CRV at $0.40 per token, consistent with the prevailing rates for over-the-counter transactions involving Egorov and several other crypto individuals.
Du then confirmed his purchase through direct messages on Twitter, stating that he had locked up the acquired tokens as veCRV. By doing so, he gains voting rights on the Curve platform in exchange for committing to hold the tokens for a specific period.
Du has also expressed his support for Curve, drawing parallels to his past support for BendDAO during its liquidity crisis. He wrote that the current challenges Curve faces are only temporary and emphasized the importance of industry players coming together to provide support. He believes the cryptocurrency industry will ultimately become stronger and healthier by standing united and assisting each other during tough times.
Some Aave users suggest looking into alternatives
According to Nansen analyst Sandra Leow, Michael Egorov has sold 72 million CRV tokens to various parties, including individuals such as Tron founder Justin Sun, crypto trader DCFGod, and Mechanism Capital co-founder Andrew Kang through over-the-counter transactions. These transactions are part of his efforts to manage his significant loan positions. The concern arises from the possibility of a sharp decline in CRV’s price leading to the liquidation of these loans, potentially causing damage to the DeFi protocols that Egorov has utilized for borrowing, with Aave being one of the major platforms involved. Given this context, some governance participants are cautious about Zeller’s proposal.
One participant pointed out that Aave should explore ways to reduce its exposure to the risk of CRV liquidation rather than increasing its exposure further. If it gains agreement, the proposal would need to undergo a voting process for it to be put into action.
Meanwhile, although Egorov’s health ratings on lending platforms have improved to approximately 1.67 or higher, there remains a lingering risk. If the price of CRV were to plummet significantly, it could trigger the liquidation of his positions, potentially leading to bad debt on these lending platforms. This situation is particularly concerning as it involves a substantial portion of the overall CRV supply. The possibility of such a large-scale liquidation could have significant implications for the affected DeFi protocols.