Curve Finance's founder, Michael Egorov, has announced that he has fully repaid the $10 million in bad debt resulting from a recent hacking attempt. The incident occurred on June 13, causing a dramatic increase in borrowing costs and triggering soft liquidations of Egorov's positions.

Egorov explained that the size of his positions was too large for the market to handle, resulting in the bad debt. He initially claimed to have paid 93% of the debt, but later confirmed that he had fully repaid the entire amount. The hacking attempt led to a sharp decline in Curve's token, CRV, which plummeted by 28%. To stabilize the price, Egorov proposed burning 10% of CRV tokens, valued at $37 million, and offered increased APY as an incentive to voters of the initiative.

The recent crisis has raised concerns about the risks posed by Egorov's debt positions to the stability of the Curve platform. A 2023 Delphi Digital report highlighted the potential for Egorov's $100 million in loans across DeFi protocols to trigger an implosion in DeFi.

Despite the pressures, Curve's soft liquidation mechanism performed as intended, allowing liquidators to prepare funds and OTC-liquidate the hacker's position. The mechanism works by eroding a borrower's "health" as a debtor and slowly liquidating their funds. Once the borrower's health has hit 0%, the mechanism performs a hard liquidation of the borrower's assets and closes out that loan.