Marc Zeller, the founder of Aave Chan, has proposed that the Aave Treasury should acquire $2 million worth of CRV tokens in USDT from Curve Founder Michael Egorov. The crypto community has had varied reactions to this suggestion, with some members expressing concern over the decision to increase their holdings of CRV while others are attempting to decrease their exposure.
This comes amid growing concerns about Curve exposure among many decentralized finance protocols. The proposal stated that acquiring $2 million worth of Curve DAO Tokens (CRV) would demonstrate DeFi’s support for DeFi and allow the Aave DAO to strategically position itself in the Curve wars.
This would also help improve the liquidity of Aave’s decentralized multi-collateral stablecoin GHO. At the current market value, $2 million USDT would be equivalent to 5 million CRV tokens. Zeller proposed that these newly acquired Curve tokens could be locked as veCRV for a period of four years.
These tokens could then be used to vote on the Curve platform, allowing Curve users to provide liquidity for token pairs that include GHO.
The current balance of the treasury and the anticipated reduction in costs for service providers in the 2023-2024 budget would enable this strategic purchase while still maintaining a cautious approach to the DAO treasury’s holdings.
The Proposal has Divided the Crypto Community
The proposal received mixed responses from the Aave community, with some members suggesting that the DeFi protocol should explore ways to reduce its exposure to the potential risk of CRV liquidation.
Some members of the Aave community praised the proposal, stating that it would help the protocol reduce its over-leveraging of CRV and support the growth of the GHO stablecoin. In another event, Jun Du, who is the co-founder of Huobi, acquired 10 million CRV tokens from the founder of Curve Finance for a sum of $4 million.
Michael Egorov, the founder of Curve, has outstanding loans totaling over $100 million from various lending protocols. Of this amount, $70 million in USDT is borrowed on Aave v2, with CRV serving as collateral. According to Aave’s risk parameters, CRV would be at risk of liquidation if its price were to drop to approximately $0.32.
