Games with a Curved Whale
One of the most notorious whales in the cryptocurrency industry is currently attacking Curve.
Avraham Eisenberg, who calls himself a "applied game theorist," is the man who was responsible for the $100 million Mango Markets scam that occurred a month ago. Eisenberg has now begun shorting the CRV token that is issued by Curve DAO. On-chain detectives made the discovery on Tuesday morning that Eisenberg had used the Aave lending protocol to borrow 88 million CRV tokens and then sold them into the market early in the first week of this past month.
Curve Finance is a decentralized exchange that has a primary emphasis on stablecoins and other low-volatility assets in order to keep slippage and fees to a minimum. Because it is typically considered to be the more cautious choice in DeFi, liquidity providers like it for the reasons stated above. Its governance token is denoted by the symbol CRV.
Because of the pressure caused by Eisenberg's sales, CRV dropped to $0.40, which enabled him to borrow even more CRV from Aave's Curve pool so that he could continue selling. There is a widespread consensus among observers that Eisenberg directed his short selling efforts at Curve founder Michael Egorov. It has been alleged that Egorov has loans on Aave that are secured by CRV tokens and have a liquidation price of $0.25. If Eisenberg is successful in driving the price of CRV up to this point, Aave's liquidation clause will be triggered, and Egorov's CRV will be put up for sale in order to settle his debt, which will result in prices falling even more.
However, a number of "whales" recognized the significance of Eisenberg's statement and immediately began building long positions in an effort to drive up the price of CRV tokens. On Tuesday, a member of PleasrDAO named Andrew Kang tweeted, accompanied by a picture of his CRV long position, the following: "First, he came for Mango, and I did not speak up." "Now, he attempts to search the loan of one of the godfather's of DeFi, and at this point, the foot is laid down to protect."
Curve continued its ascent during the subsequent hours, finally reaching Eisenberg's liquidation threshold which was located slightly above $0.60. The liquidation mechanism for Aave began selling his USDC collateral in order to purchase back CRV tokens off the market so that he could pay off his obligation. However, it would appear that many others who had placed long bets on Curve earlier today at $0.40 also started taking profits around this level, which sped up the process of liquidating their positions. In total, roughly $5 million worth of Eisenberg's stake was liquidated as a result of that occurrence. At the time this article was written, Eisenberg's position had already begun to liquidate once again, which pushed CRV to above $0.70.
chart of CRV and USD (Source: Binance via TradingView)
Others are not persuaded, despite the fact that many observers consider this incident to be a defeat for Eisenberg. Eisenberg had tweeted in a cryptic manner that he was "taking the day off to spend time with family, hope y'all behave yourselves" prior to the beginning of the process of liquidating his Aave investment. This article was widely interpreted as "psyops," which is short for psychological operations and refers to strategies that aim to influence one's opponents or foes through psychological means. Before unveiling his comprehensive strategy, it is speculated that Eisenberg would make an effort to deceive his rivals into believing that they are in a secure position.
It's also possible that Eisenberg has a considerably larger off-chain long position on CRV, and he may have planned all along for his Aave loan to be paid off as soon as possible in order to encourage CRV bulls and profit from the volatility. Others believe that he is only biding his time before committing further funds in order to drive down the price of CRV and make another attempt to beat Egorov's $0.25 liquidation price.
One explanation that is even more far-fetched than the others is the idea that Egorov and Eisenberg planned the entire show from the beginning in order to pique people's interest in the Curve protocol. It just so happens that Egorov revealed the code for the future stablecoin that Curve is developing earlier today on GitHub.
Following his October theft of $100 million in customer assets from the Mango Markets protocol located in Solana, which he accomplished through the use of price manipulation strategies, Eisenberg has become notorious in the cryptocurrency community. After it became known that Eisenberg was responsible for the theft, he made a deal with the team at Mango Market to return half of the stolen monies to cover customer losses in exchange for Mango Market using its own treasury funds to assist in covering the losses.
Eisenberg's comments that the Mango Markets exploit was a "very successful trading approach" incited fury among members of the decentralized finance community. While there are members of the DeFi community who feel Eisenberg did nothing wrong, there are also members of the community who have harshly condemned his actions and the bad effect they had on the space.
It is now unknown whether or not Eisenberg has been defeated or whether or not his partial liquidation was all a part of his strategy. Fans of DeFi will be following the developments with keen interest to see what comes next. It also indicates that Eisenberg is moving money around, potentially to deposit as security in order to block the liquidation of his Aave investment.
