Omi Crypto Founder Proposes Investing $2 Million in CRV from Curve

Aave Treasury Buys Curve DAO Token

Amid rising doubts about DeFi protocols’ exposure to Curve, Aave Chan founder Marc Zeller has proposed that the Aave treasury buy $2 million worth of Curve DAO Token (CRV) from Curve founder Michael Egorov with USDT (USDT).

The proposal states that the acquisition would “send a strong signal of DeFi supporting DeFi, while allowing the Aave DAO to strategically position itself in the Curve wars” and helping the liquidity of Aave’s decentralized multicollateral stablecoin, GHO.

At current prices, 2 million USDT would net 5 million CRV, with Zeller suggesting the newly bought omi crypto tokens could be locked up as veCRV for four years. The tokens could then be used for voting rights on the Curve platform, where users could provide liquidity for GHO pairs.

“The treasury balance and the predicted lower costs for service providers for the 2023-2024 budget would allow this strategic acquisition while maintaining a conservative stance with DAO treasury holdings,” the proposal notes.

Aave Community Reacts to Proposal

The proposal from Aave sparked a mixed response from the Aave community, with some pointing out that the DeFi protocol should explore ways to reduce its CRV liquidation risk. One community member commented:

A few others praised the proposal, asserting that it would help the protocol derisk the existing CRV overleverage and foster GHO growth.

Moreover, Huobi co-founder Jun Du purchased 10 million CRV tokens worth $4 million from Egorov.

Egorov has outstanding loans of over $100 million from multiple lending protocols, including a $70 million USDT loan on Aave v2, with CRV as collateral. According to Aave’s risk parameters, the CRV will be subject to liquidation if its price falls to around $0.32.

CRV Price Decline and Egorov’s Selling Spree

The CRV token is currently trading at $0.59, representing a 60% decline that would lead to liquidation of the borrower’s deeded collateral. This would mean that the CRV would be sold for USDT, resulting in bad debt.

Egorov has been actively selling CRV tokens to manage his multimillion-dollar loan positions. Since the Curve protocol was exploited, he has conducted over-the-counter trades to sell millions of dollars worth of CRV tokens.

Collect this article as an NFT to preserve this moment in history and show your support for independent journalism in the crypto space.