- One of the wallets borrowed $54 million.
- Curve DAO tokens were used as collateral.
- Freezing the loans in CRVs could solve the problem, according to experts at the firm Gauntlet.
Gauntlet recommends that Aave block the loan collateral in Curve DAO tokens (CRVs). Experts believe that this will help to overcome the current crisis situation. The corresponding document was published on the official Aave website.
The attention of the Gauntlet team was drawn to address 0x7a16ff827270133f063aab6c9977183d9e72835428. This wallet received a loan of approximately $54 million in USDT stablecoins secured by $158 million in CRV tokens.
“We recommend blocking credit collateral in the second version of the protocol and reducing the loan-to-value (LTV) ratio to zero. This will help prevent new CRV secured loans due to the recent liquidity crunch,” it said.
Loan-to-value (LTV) ratio is an important metric to compare the amount of any collateralized asset to the size of the loan. The higher the down payment, the lower the LTV ratio. When it’s zero, you can’t borrow.
Decentralized exchange Curve Finance was hacked on Sunday, July 30. The attackers took money from several pools and caused about $50 million in damages. The exploit drove down the price of the CRV token and jeopardized the existence of the project. Curve Finance founder Mikhail Egorov has started selling tokens on the OTC market at a reduced price of $0.4. At the time of writing, it is trading at $0.57, according to CoinMarketCap:
Curve token price chart (CRV). Source: CoinMarketCap.
The first suspects have emerged in the hacking case of one of the largest DEX platforms.