Michael Egorov, founder of Curve, has created a new liquidity pool on his decentralized exchange to buy time to repay his CRV-collateralized borrowing from FraxLend. The pool, crvUSD/fFRAX, is seeded with 100,000 CRV rewards and is dedicated to FraxLend’s CRV/FRAX Liquidity pool. Egorov has borrowed 15.8 million FRAX stablecoin by locking 59 million CRV as collateral.
Crypto research firm Delphi Digital noted that the interest rate on the loan can double every 12 hours, subject to the pool’s utilization rate holding at 100%. The utilization rate refers to the ratio of the amount of assets borrowed to the total liquidity in the pool. DeFi researcher Ignas explained that Egorov needs more FRAX deposited to the CRV/FRAX lending pool in order to reduce the borrowing APY and provide him with more time to repay the loan.
The new pool, floated late Monday, has attracted over $5 million in liquidity and brought down the utilization rate in FraxLend’s FRAX/CRV pool to 54.78%. Delphi Digital said in a Tweet thread that the new pool is an attempt to incentivize liquidity towards the lending market in order to lower utilization rates and decrease the risk of his debt spiraling out of control.