Delphi Digital: The founder of Curve has a larger risk exposure to CRV in Frax due to variable interest rates.
2023-08-01 03:54
Odaily News: Delphi Digital tweeted that Curve founder Michael Egorov has pledged 59 million CRV, worth 158 million FRAX debt on Frax Finance. Although this position is much smaller than his position on Aave, the time-weighted variable interest rate on Fraxlend poses greater risks to CRV.
Delphi Digital stated that with the current 100% utilization rate, the interest rate will double every 12 hours. The current interest rate is 81.20%, and it is expected to increase to close to the maximum value of 10000% APY in just 3.5 days. Regardless of the CRV price, this extremely high interest rate will eventually lead to Egorov's liquidation. Such a large risk position, considering the existing low liquidity, poses a serious threat to the price of CRV, with on-chain liquidity value of approximately 10 million USD and Binance's 2% depth of 370,000 USD.
When the liquidation threshold reaches 55%, the position will be liquidated at 0.3767 USDT.
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