A proposal by financial modeling platform Gauntlet has suggested that a cap should be imposed on the use of Curve (CRV) as collateral to prevent a particular Ethereum address from accumulating more debt. The address, which has accumulated $67.7 million worth of debt in USD Coin and Tether through the AAVE v2 protocol using $185 million of CRV tokens as collateral, has led to concerns that it may continue increasing its debt, leading to the risk that it may be liquidated if there is a sudden fall in the price of CRV. Some participants believe that the account is owned by Curve founder Michael Egorov, although this has not been independently confirmed.
– Gauntlet has suggested that the AAVE decentralized autonomous organization (AAVE DAO) should implement a patch to freeze any further uses of CRV as collateral for loans, which would allow the account to continue holding its current loan position but would also prevent it from accumulating any further debt.
– Critics of the proposal have defended the account, stating that the account’s owner might simply believe CRV tokens are undervalued, leading them to believe that as the price declines, it makes sense to increase their use as collateral.
– AAVE-Chan Initiative founder Marc Zeller has weighed in on the proposal, stating that AAVE DAO should be careful not to violate “the core ethos of DeFi, which is neutrality.”
