Over the last weekend, shockwaves were sent through DeFi as Curve pools were hacked due to a Compiler issue in Vyper. In total $70m were syphoned off across the following pools: JPEG’d’s pETH-ETH, Alchemix’s alETH-ETH pool, the CRV/ETH pool twice, Pendle’s pETH-ETH pool, and Metronome’s msETH-ETH pool. Some of the funds were returned by MEV bots, eg c0ffebabe.eth sent $5.4m to the Curve deployer, which front-ran the exploit.
Most notably, 7m CRV tokens were stolen in the exploit. Onchain liquidity for CRV has dwindled over the last months: If the hacker was to offload these tokens, it would send CRV down to $0.4, a level that would be dangerously close to liquidation prices across Aave, Fraxlend and Abracadabra.
This comes as a result of Curve co-Founder Michael Egorov borrowing $105m across these markets - at its peak - secured on his $CRV deposits.
In order to avoid a total price meltdown and second-order effects across DeFi, Egorov has started selling CRV OTC to a range of market participants at $0.4 with a 6 months lock-up. Investors are scooping up these discounted CRV to have an advantage in the Curve-Wars. So far 110m CRV worth $44m have changed hands.
Egorov has subsequently paid down his loans and reduced liquidation prices to <$0.4.
BTC and ETH have been remarkably stable during the last week’s events, performing 0.1% and -1.3% over the last 7 days, respectively.
In other news, Tether published their Q2 2023 report showing $850m in quarterly profits.
GUSD liquidity increased slightly from $2.2m to $2.4m. sUSD liquidity decreased from $24.1m to $16.4m. LUSD fell from $14.8m to $9.3m. sUSD backing further declined from 450% to 430%. LUSD backing stayed flat at ~250%.
There are no significant oracle deviations between DEX and CEX prices.
Over the last weeks, we highlighted how stkcvxcrvPlain3andSUSD has an outsized share within the collateral pool accounting for 40% at the top. Its weight has considerably reduced to 12.6% now. However, stETH has emerged as the new heavyweight in the collateral pool with a share of 36.5% (-550bps vs last week). Combined, these two assets make up 49% (-14 percentage points) of all collateral assets. This requires monitoring to avoid the build up of significant cluster risks.
The balance of ETH & stETH in the primary liquidity pool on Curve has halved since June driven by Lido DAO’s decision to switch off the LDO incentives from June 2023. The TVL has been further impacted by last week’s Curve hack, sending TVL down to $370m from $520m a week earlier.
We do however believe that the liquidity is sufficient for Gearbox’ size.
There is a live vote to set the liquidation thresholds for CRV, CVX and FXS from 0.25 to nil.
Total pool size increased from $7.1m to $8.7m. yvDAI is the new #1 asset at $4.1m (+$1.8m), followed by stkcvxcrvPlain3andSUSD at $2.3m (-$1.3m) and stkcvxFRAX3CRV-f
Total debt increased from $6m to $7.4m.
The pool remains predominantly collateralized by stablecoins.
Total pool size stayed flat at $7m, with the largest collateral assets being stkcvxFRAX3CRV-f at $2.3m, followed by stkcvxLUSD3CRV-f at $1.7m and stkcvxcrvPlain3andSUSD at $1.2m.
This pool also remains largely backed by stablecoin assets.
Total debt amounts to $6m.
The pool amount decreased from $13.8m to $11.8m. The largest collateral assets are stETH (-$1.9m to $10.1m), stkcvxsteCRV ($0.7m, unchanged) and FRAX (-$0.1m to $0.4m).
The pool remains collateralized by mostly ETH or staked ETH assets.
Total debt decreased from $11m to $9.1m.
The FRAX credit accounts have been closed over the last week. The collateral of $0.7m has been withdrawn and debt worth $0.3m has been repaid.
The pool has no active credit accounts. All active positions were closed several weeks ago.
Demand for borrowing stETH continues to be subdued with no active credit accounts. This is a continuation from the previous weeks.