Aave Chan founder suggests purchasing $2M CRV from Curve founder.

Aave Chan founder suggests purchasing $2M CRV from Curve founder.

Understanding the Curve Wars: A Deep Dive into the Blockchain Industry

In recent times, the blockchain industry has been abuzz with uncertainty surrounding Curve exposure for numerous decentralized finance (DeFi) protocols. Against this backdrop, an intriguing proposal by Aave Chan founder Marc Zeller has caught the attention of the community. Zeller suggests that Aave Treasury acquires $2 million worth of Curve DAO Tokens (CRV) in USDT from Curve Founder Michael Egorov [^1^].

The Proposal: A Strategic Move to Support DeFi

Zeller’s proposal emphasizes that acquiring $2 million worth of CRV tokens would establish a powerful signal of DeFi supporting DeFi. With this strategic move, the Aave DAO would position itself in the Curve wars, while enhancing the liquidity of Aave’s decentralized multi-collateral stablecoin, GHO [^1^].

At the current market price, $2 million worth of USDT would translate into 5 million CRV tokens, which Zeller suggests could be locked as veCRV for four years. This would grant the token holders voting rights on the Curve platform. Furthermore, these tokens would provide liquidity options for token pairs involving GHO, strengthening its overall market presence [^1^].

Mixed Reactions within the Aave Community

Given the proposal’s potential impact, it is not surprising that it received mixed reactions from the Aave community. Some members argued that the DeFi protocol should seek ways to reduce its exposure to the risk of CRV liquidation. For these skeptics, the proposal seemed to prioritize the interests of an individual who had taken excessive leverage, undermining the decentralized nature of DeFi [^1^].

On the other hand, there were those who applauded the proposal, reasoning that it would not only help reduce the current over-leverage of CRV but also contribute to the growth of the GHO stablecoin. They saw it as a strategic move to de-risk the protocol and enhance its long-term stability [^1^].

The CRV Selling Spree and its Implications

While the debate surrounding the Aave proposal continues, another interesting development has transpired. Jun Du, the co-founder of Huobi, purchased 10 million CRV tokens worth $4 million from Michael Egorov, the Curve Finance founder. This demonstrates the significant activity surrounding CRV and its impact on the wider blockchain industry [^1^].

To understand this further, it is worth noting that Egorov currently holds outstanding loans of over $100 million from various lending protocols. Out of this, $70 million is in USDT on Aave v2, using CRV as collateral. Aave’s risk parameters indicate that if the price of CRV drops to around $0.32, it will be at risk of liquidation [^1^].

Currently trading at $0.59, CRV faces the possibility of liquidation if its price experiences a decline of approximately 60%. In such a scenario, the borrower’s collateral would be liquidated to repay the borrowed asset. Consequently, CRV would be sold for USDT, resulting in bad debt [^1^].

In recent times, Egorov has been actively selling CRV tokens through over-the-counter trades to manage his multi-million dollar loan positions. These events highlight the complex dynamics and risks involved in the DeFi space, particularly during times of vulnerability and market turbulence [^1^].

Looking Ahead: Navigating the Curve Wars

As the blockchain industry continues to evolve, the ongoing Curve wars and their implications provide valuable lessons and insights. The Aave proposal, although contentious, exemplifies the strategic decision-making required to balance risk and growth in DeFi projects. It highlights the importance of considering the long-term stability and liquidity of tokens within the ecosystem [^1^].

However, it is crucial for DeFi protocols and their communities to engage in comprehensive discussions and debates to ensure that proposals align with the broader interests of the ecosystem. As the blockchain industry matures, the challenges will persist, requiring proactive measures to address them effectively [^1^].

In conclusion, the Curve wars and the proposed acquisition of CRV by Aave underscore the intricate nature of the blockchain industry. The discussions and actions surrounding these events exemplify the continuous efforts to shape and enhance the realm of decentralized finance. With a comprehensive understanding of the risks, rewards, and strategic choices, stakeholders can navigate the ever-evolving landscape and drive the industry towards greater efficiency and stability [^1^].

References: [^1^]: Source: Article [^1^]