Michael Egorov, founder and CEO of Curve Finance (CRV), has clarified recent misinformation surrounding the UwU Lend hack and the proposed CRV token burn. Speaking to Cointelegraph, Egorov emphasized that the hack did not exploit Curve Finance itself but targeted UwU Lend.

In a detailed Q&A session, Egorov explained, “This was not a Curve exploit. This was an exploit of a separate project [UwU Lend].” He elaborated that the hacker, in a cash-out maneuver, deposited CRVs taken from UwU to lend.curve.fi (LlamaLend) and then disappeared with the funds, leaving a significant debt in the system.

Egorov highlighted several measures to prevent future exploits, advising UwU Lend to “re-verify all contracts and connect them to good security auditors” in hopes of recuperating the losses incurred.

Addressing the misinformation about the CRV token burn, Egorov clarified that the proposal to burn 10% of CRV tokens, valued at $37 million, was falsely reported. “This information was tweeted by a fake (impersonator) account, accompanied by a scam link. Few journalists did not fact-check the news and published it,” Egorov stated, dispelling the rumor that the Curve team intended to burn the tokens to stabilize prices and increase annual percentage yields.

In the aftermath of the UwU exploit, Egorov announced on June 15 that he had fully repaid the $10 million in bad debt caused by the soft liquidations triggered by the incident. He explained, "CRVs posted as collateral for loans amounted to probably 30% of the circulating supply; half of that was on Curve, so indeed, it incurred some bad debt. It was already repaid. No one is affected.”

When asked about Curve Finance’s plans to manage liquidation risks in volatile markets, Egorov advised implementing borrow caps for non-major cryptocurrencies (not BTC or ETH) as collateral. He noted, “Data shows that Curve-specific markets can be well-parametrized to withstand even these conditions.”

Egorov also addressed the industry's handling of onchain arbitrage, stating, “Industry heavyweights did not fully know how to deal with liquidations; they did not attempt to do partial hard liquidations for my position on Curve. Eventually, I had to do it myself.”

Looking ahead, Egorov suggested creating “open-source liquidation bots” and enhancing community education about liquidations to address broader decentralized finance implications.

The clarifications and proactive measures outlined by Egorov aim to reinforce the security and stability of Curve Finance and the broader DeFi ecosystem.