TechFlow News — Cryptocurrency research firm Delphi Digital tweeted that Michael Egorov, founder of Curve, holds 59 million CRV as collateral and 15.8 million FRAX in debt on Frax Finance. Although this position is significantly smaller than his exposure on Aave, it poses a greater risk to CRV due to the time-weighted variable interest rates within Fraxlend.
Analysis shows that when Fraxlend’s utilization reaches 100%, interest rates double every 12 hours. At the time of writing (approximately one hour ago), the rate had already reached 81.2%. It is projected that within 3.5 days, the rate could rise to nearly 10,000% APY. Regardless of CRV’s price movement, such an extremely high interest rate could ultimately lead to the liquidation of Michael’s position.
With a maximum loan-to-value ratio (LTV) of 75%, the liquidation price for his position would reach 0.517 CRV/FRAX within 4.5 days—meaning even a less than 10% drop from the current price could trigger liquidation.
Michael has attempted twice to reduce his debt and utilization, repaying 4 million FRAX within the last 24 hours. However, utilization remains at 100%, as users rush to withdraw liquidity immediately after he repays.
Given the magnitude of this position and the existing low liquidity, these liquidation risks raise serious concerns for the CRV price. If a position of this scale were to be liquidated, CRV’s price could plummet to extremely low levels, potentially triggering cascading effects across a significant portion of the DeFi ecosystem.
