The Curve platform has encountered a series of challenges, including incidents such as the Conic, JPEG’d, and Curve hacks. These adversities have exerted an impact on the total value locked (TVL) and have consequently triggered repercussions on the liquidity and pricing of CRV tokens. As a strategic measure, Abracadabra Money is contemplating a substantial hike in interest rates, aiming to mitigate the inherent risk associated with CurveDAO’s native token, CRV.
Abracadabra Money Unveils Rate Adjustment Proposal
In a recent announcement on August 1, Abracadabra Money has put forth a proposal to recalibrate the interest rates linked to collateral-based transactions within CRV cauldrons.
The proposal outlines the concept of introducing interest charges on the cauldron’s collateral prior to its allocation to the protocol’s treasury, a methodology reminiscent of the approach taken by the DAO with Wrapped Bitcoin and Wrapped Ethereum cauldrons.
The proposed adjustments delineate varying rates, with a rate increment of 30% applicable to a principal amount ranging from $0 million to $5 million, a 100% increase for a principal range of $5 million to $10 million, and a substantial 200% augmentation for a principal range of $10 million to $18 million. These adjustments are intelligently structured to align with the collateral ratio of the smart contract, strategically enhancing the potential for a comprehensive recovery of the principal and thereby upholding the integrity of the protocol.
Reactions and Discourse Surrounding the Proposal
The response to these suggested modifications has been a confluence of perspectives across the crypto community on Twitter. Notably, Drake Evans from Frax Finance, shared reservations about the potential impacts of the proposal, highlighting the possibility of adverse outcomes. Despite the divergence of opinions, the proposal remains open for voting and is poised to undergo scrutiny for the subsequent 46 hours from the time of this report.
Addressing the Aftermath of the Curve Hack
This strategic recalibration proposed by Abracadabra Money has been precipitated by the platform’s recent entanglement with CRV risk, precipitated by decentralized finance (defi) exploits, necessitating a strategic response.
The far-reaching implications of the hack, involving the pilfering of funds ranging between $20 million and $40 million from Curve, a prominent DEX harboring $1.69 billion in total value locked (TVL), cast a shadow over the defi landscape. This incident magnified apprehensions surrounding defi security, leading prominent figures in the crypto space, such as Justin Sun, to intervene and support Curve Finance.
The founder of Curve Finance, Michael Egorov, navigated the aftermath by securing loans totaling nearly $100 million from various lending protocols. These loans are collateralized by 427.5 million CRV tokens, constituting 47% of the entire circulating supply of CRV.
In addition to this, Egorov has pledged 51.65 million CRV tokens as collateral, and he maintains a debt position of 14 million MIM within the Abracadabra ecosystem.
As the community inches closer to a decisive election, vigilance pervades the realm, with attention trained on Abracadabra’s strategic response to the recent hack. Observers are keenly interested in understanding the potential implications this event might engender within the financial sector.