Crypto market makers stepped in on Binance to support Curve’s native token CRV after the decentralized exchange’s late Sunday exploit sent the cryptocurrency crashing and threatened the liquidation of a large CRV-collateralized borrowing and market-wide contagion. According to Paris-based crypto data provider Kaiko, the 2% bid-side market depth, or the collection of buy orders within 2% of the mid-price, doubled from roughly 500,000 CRV to more than 1 million CRV following the exploit. This surge in the bid depth was reflective of market makers offering plunge protection to the cryptocurrency, said Clara Medalie, director of research at Kaiko.
CRV fell over 14% to 58 cents immediately following the late Sunday exploit, raising fears of a potential liquidation of Curve founder Michael Egorov’s multi-million dollar worth of USDT and FRAX borrowings collateralized by CRV. This negative feedback loop threatened to push prices down to Egorov’s then liquidation level of 37 cents, potentially destabilizing the broader decentralized finance market. However, it’s clear that there are A LOT of incentives to not have CRV price drop below a certain level, Medalie added.
The 10% bid-side depth on Binance also increased sharply, while overall liquidity in native token terms across other exchanges did not see a notable change, according to Medalie and FalconX Research. This influx of buy-side liquidity has averted the panic and supported the CRV token.