Michael Egorov, founder of decentralized finance (DeFi) protocol Curve Finance, has claimed to have repaid 93% of the $10 million in bad debt resulting from a recent liquidation triggered by a hack attempt. This news comes amid a tumultuous period for Curve, during which its native token, CRV, plummeted by 28% in a single day.

The liquidation was part of Curve Finance's soft liquidation mechanism, which was tested in real-world conditions during the hacking incident on June 13. Egorov stated, "The size of my positions was too large for markets to handle and caused $10 million of bad debt. I have already repaid 93%, and I intend to repay the rest very shortly."

Blockchain analytics firm Arkham Intelligence reported that Egorov faced $140 million in liquidations due to "borrowing $95.7 million in stablecoins (mostly crvUSD) against $141 million in CRV across five accounts on five protocols." At the height of the hack, Egorov was facing $60 million in annualized fees to maintain his borrowings.

Arkham explained that this was because there was almost no remaining crvUSD available to borrow against CRV on Llamalend, with three of Egorov's accounts constituting over 90% of the borrowed crvUSD on the protocol. "If the price of CRV drops by ~10%, these positions may begin to be liquidated," Arkham warned.

To stabilize the CRV token price, Egorov proposed burning 10% of the outstanding CRV tokens, valued at $37 million at the time of the announcement. "As a reward, active voters will earn a 3-month APY booster on all platform deposits," Egorov added.

This incident is not the first time Egorov's CRV holdings and borrowings have caused disruptions. In August 2023, Curve Finance suffered a $62 million exploit, resulting in bad debt from Egorov's $100 million borrowings on Curve. He eventually repaid those funds as well.

Despite these challenges, Curve Finance remains the 19th largest DeFi protocol, according to blockchain analytics platform DeFiLlama, with over $2 billion worth of crypto assets locked within its contracts.