Near disaster averted! Whale borrows $40 million to short CRV, ends up owing Aave around $1.6 million

The governance token CRV of the DeFi stablecoin exchange giant Curve was recently targeted by large holders for short selling, plunging to as low as $0.4, with a drop of over 20% on the 22nd. Its historical high was at 60 and the historical low was at 0.33. However, the large holders were squeezed in a short squeeze from the evening of the 22nd to the early morning, with their borrowings being significantly liquidated, ending the operation. Nevertheless, this left a hefty debt for the decentralized lending platform Aave.

Big Player Borrowing to Short CRV

According to on-chain data account Lookonchain's observation, a CRV short seller named ponzishorter.eth is launching a short attack on CRV. It is claimed to be Mango Markets attacker Avraham Eisenberg.

On 11/13, ponzishorter.eth borrowed $40 million from Aave to short sell CRV for a week. This caused CRV to drop from the $0.6 level to $0.4 level, a 26% decrease.

On 11/22 evening, he borrowed another 20 million CRV worth approximately $9.9 million from AAVE and transferred 10 million CRV to OKX for selling; shortly after, he borrowed another 10 million CRV.

CRV Collateral Borrowers Facing Liquidation, Including Curve Founder

Due to the short seller's selling pressure, those who borrowed by pledging CRV as collateral are facing liquidation pressure. For example, the Curve founder used CRV to borrow USDC and was on the verge of liquidation at one point, promptly increasing the collateral by another 20 million CRV.Related address

Shorting CRV with $40 Million Borrowed

It is estimated that ponzishorter.eth borrowed a total of 92 million CRV worth $39.86 million. At the same time, he also attempted to deplete CRV liquidity by selling through MEV bot.

Big Player Liquidated due to Short Squeeze

Around early morning on the 23rd, as the CRV price surged significantly, ponzishorter.eth was liquidated on Aave with $3.9 million USDC to buy back CRV to repay the debt. ponzishorter.eth did not add additional collateral after this.

According to the on-chain interaction of this address, after the initial liquidation, there were several more liquidations due to the rise in CRV, resulting in a significant decrease in ponzishorter.eth's address assets, ending the short operation.

Owing Aave $1.6 Million

Decentralized lending platform Aave stated that these liquidations occurred in accordance with the protocol but due to the large position, there are debts left in the protocol.

Aave mentioned that the position did not cover 2.64 million CRV, less than 0.1% of the borrowed amount.

Aave also initiated a review afterward to reduce similar risks in the future.

Reason for the Attack?

Aave stated that Avraham Eisenberg was implementing what he considered a high-profit trading strategy.

His related accounts did not specifically explain the reason, jokingly mentioning that "attacking Aave is because he can't stand others mispronouncing his name"; and another tweet saying: "Just bored thinking, if any other team created a token, borrowed money to fight a nine-digit position." It is unclear whom this is referring to.