CRV lending crisis warning: Curve founder faces huge liquidation risk

Recently, Michael Egorov, the founder of the Curve platform, has fallen into a serious CRV token lending crisis. He currently holds about $140 million in CRV tokens that are facing liquidation risks. In order to maintain these loans, he borrowed about $95.7 million in stablecoins, mainly crvUSD, with CRV tokens as collateral. The annualized interest cost to maintain these loans is as high as a staggering $60 million.

This incident once again confirms the points I have emphasized many times in the past:

First, borrowing and leverage operations in the bull market should be cautious. Although the bull market seems prosperous, not all assets will continue to rise. Over-reliance on borrowing and leverage is prone to huge losses when the market pulls back. The driving force of the bull market often comes from those investors who dare to take risks, but this also means the existence of risks.

It is crucial to choose investment targets. In a bull market, not all currencies will rise with the general trend. Only by choosing currencies with potential and formulating appropriate investment strategies can you make profits in the bull market. Investors should stay away from those currencies with problems in fundamentals and funds to avoid being implicated.

The ability to identify bull and bear cycles is crucial for investors. From the incident of the founder of CRV, we can see that even with strong strength and resources, it is impossible to be immune in the currency circle. If you cannot identify the bull and bear cycles in time, you cannot make the right decisions at critical moments. Just like the collapse of Three Arrows Capital and FTX in 2022, the failure to identify the bull and bear cycles in time eventually led to a financial crisis.

In the investment process, investors must not only be able to understand the market, but also maintain awe of the market. Don't underestimate the power of the market, and don't overestimate your own abilities. Only by truly understanding the market can you cross the bull and bear in the currency circle and achieve long-term profits.

The CRV lending crisis once again reminds us to be cautious and rational in the investment process. Only by choosing the right investment target, formulating the right investment strategy, and identifying the bull and bear cycles in time can we be invincible in the currency circle.

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