Curve Finance's Test: CRV Coin's Recovery Post-Exploit

Last Updated August 2nd 2023
3 Min Read

Key Takeaways -

  • The CRV coin, part of the Curve Finance protocol, experienced a significant price recovery following a major exploit, but the recovery remains fragile and the future uncertain.
  • Curve Finance, a stablecoin-oriented protocol, has seen a drop in its Total Value Locked (TVL) to half its start-of-year level, indicating the severity of the situation.
  • Controversies surrounding Curve Finance CEO Michael Egorov and the involvement of Justin Sun, a controversial figure in the crypto community, have added complexity to the situation and could influence the future of Curve Finance.

In the volatile landscape of the cryptocurrency market, recent events have stirred significant fluctuations. This analysis provides an in-depth look at the current market situation, focusing on the recent developments surrounding the CRV coin.

The Challenge for Curve Finance

Curve Finance, a key player in the Decentralized Finance (DeFi) space on the Ethereum blockchain, is currently in a tough spot. Its native CRV coin is attempting to recover from a significant price drop, but the path to recovery seems uncertain.

On August 1, the CRV coin price saw a 25% rise following a 35% drop on July 30-31. This sudden drop was a result of a panic sell-off triggered by a $47 million exploit on Curve Finance.

Curve Finance and Stablecoins

For those who might not be familiar, Curve Finance is a protocol that focuses on stablecoins. It operates across 12 different blockchains and launched its own algorithmic stablecoin, crvUSD, in May 2023. The platform supports a variety of stablecoins:

  • USDT
  • USDC
  • DAI
  • TUSD
  • USD

The Pressure on CRV Coin

Despite the recent price recovery, the CRV coin is still under pressure. The team is working tirelessly to fix the damage and reassure investors that their funds are safe. Most exchanges have not blocked CRV withdrawals, except for Upbit, a South Korean exchange. Upbit cited vulnerabilities in some of the stablecoin pools as the reason for their action.

The Hit on Total Value Locked (TVL)

The Total Value Locked (TVL) in the protocol took a hit, falling to $1.67 billion, which is half of what it was at the beginning of the year. This drop is due to a series of unfortunate events over the past two years:

The Hit on Total Value Locked (TVL)

  • The depegging of Magic Internet Money (MIM) and UST
  • The FTX collapse
  • The recent exploit

Past Exploits

This isn't the first time Curve Finance has been exploited. In August 2022, the protocol lost around $570,000 when attackers compromised the front end of its liquidity pool.

Trading Volumes and Ethereum

Interestingly, the majority of trading volumes for Curve come from Ethereum. In the past two days, these volumes have increased significantly, going from $62 million on July 29 to over $340 million on July 30-31.

Controversies and Criticisms

In the midst of the CRV coin's struggles, some actions by Curve officials have raised eyebrows. In May 2023, Curve Finance CEO Michael Egorov and his wife Anna reportedly bought two mansions in Melbourne worth around $40 million. They allegedly used a DeFi loan with Curve tokens to finance this purchase.

Scott Melker, a well-known crypto analyst, criticized Egorov for potentially putting the entire DeFi sector at risk for personal gain. However, it's important to note that while Egorov's actions might be seen as reckless, it doesn't technically count as a "rug pull" since he didn't directly harm his customers.

Controversies and Criticisms

The Involvement of Justin Sun

Adding to the drama, Justin Sun, the controversial founder and CEO of Tron, bought nearly $3 million worth of Egorov’s governance tokens to supposedly "help" the situation. Sun has been accused of market manipulation, so his involvement might not inspire confidence among Curve customers. Sun plans to collaborate with Curve on a stUSDT staking pool and use the CRV coins he bought to vote for the pool.

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