​​👩‍⚖️ [Daily Digest] $0.4️⃣ CRV

Have you slept for more than 6 hours today? Well, good luck catching up… There is a chance you are rekt!

First of all, the “Vyper hack”. On Sunday 30 July, several hack attacks drained funds worth about $70 million on Curve Finance. CRV/ETH pool, alETH/ETH pool, msETH/ETH pool, pETH/ETH pool. Details of the hack are in this tweet. Some of the MEV and whitehat operations saved some funds, see the full list by Tay.

And this leads us to the next point… the CRV situation. Funny fact, which everyone always knew, but still LOL: Michael owns about 50% of all CRV circulating and all of that is collateral on lending protocols... Talk about capital efficiency.

📓 we wrote about CRV and Michael’s positions a few weeks ago on June 14 (scroll up). In fact, the topic itself was discussed in Aave for months! Even during Avi fiasco-manipulation back last year… Yet nothing was done, because key players seem to believe that there is no need to force the hand. Well, it was almost forced last night…

With a chunk of CRV over $30M worth getting into hacker’s hands - one gets the question of “what if… cascading liquidations”. For your reference, CRV would need to drop to $0.40 & below. And with three major players having debt: Aave, Abra, and Frax - the question is, who carries the torch. Because it’s quite likely that one would be made whole, but that could evaporate most of the capital on the buy (bid) side for CRV. So it's less about liquidations even (again, Michael already holds 50% of circulating, and that 50% can't be borrowed by others to short) - but it's more about the quality of the collateral and whether the debt will ever be repaid (?)

Anyway. By design (see Sam’s reply in lobsterdao chat), Frax was the first one to force Michael’s hand, as the debt would increasingly get worse and worse. As such, for the next few hours, Michael kept dumping CRV OTC engaged in highly sophisticated OTC deals trying to secure some funds to repay some of the positions.

💡 the terms seem to have been $0.40 and 3-6 months lockup. But the lockup is not anyhow enforced on-chain, as you see via the links and receipts of tokens, no vesting contracts are deployed. Source: etherscan lol. There doesn't seem to be any other off-chain agreements based on the claims of the buyers themselves.

The buyers haven’t been VC funds or some names. In fact, Evgeny of Wintermute skeptically referred to these deals. Saviors of the day, or rather, Michael’s house (note: no, the house is fine) have been:

- 5M CRV ($2M USD) to Tron founder Justin Sun, who already plans to brr yields for his muh RWA protocol (likely putting his own other assets and re-collateralizing them… smh, let’s see how this goes).
- 4.25M CRV to DCFGod
- 3.75M CRV to scammer machi Jeffrey Huang
- 2.5M CRV to crypto investors DWF Labs
- 2.5M CRV to DeFi project Cream Finance
- etc. $11M+ plus. See his debank profile.

It’s a bottom of the barrel mostly, pretty eh. Justin already planning some schemes, although he bought it fair and square, why not… But back when repayments started happening, prices went from $0.50 back to $0.60 - as UK researchers say “not seen in existence since last week” kek.

😮‍💨 Adam and fudzy have been violently expecting fireworks, but some of their points make sense: ok, no cascade now, but where will demand come from for the other CRV part? It’s semi-liquid shitcoin now? Yes and no. It’s quite astonishing how so far it worked out, and there is still $10M+ demand outstanding from even some founder DMs I got willing to buy being a half of that as is. Fascinating, weird, and… almost wholesome. But weird.

⚖️ Some other news: Multichain funds seized by CCP seem to have indeed been seized by CCP. And worldcoin eyes being sold, wow surprise lol… but still allegedly. Stay safu. DeFi is fine. There is no real Black Thursday here for the whole industry. Yes it would be a big event, but likely the holes would be mostly covered. Cheers.