Retro on AVI and His Epic Battle With Curve, the Bad Debt, and the Biggest Winner
Someone's in jail, and someone bought mansions.
Bloomberg reported that Avraham Eisenberg, a.k.a. Avi, the guy who attacked Mango Markets using oracle manipulation and continued to do so on AAVE, will face the judge in trial on Dec. 4.
Looking back, Avi’s battle with Michael Egorov, the founder of Curve, caused more consequences to the industry due to the collateral damage of the $1.6 million bad debt on AAVE.
It could be hard to predict what the jury would think of Avi’s behaviors. Hopefully, a retro on the event can reiterate the risks and potential solutions for episodes alike in the future.
First, let’s walk through the battlefield, detailing the moves of Avi and Michael.
Cleaning Up of the Battlefield of Avi and Curve
What Happened On November 22, a big whale (ponzishorter.eth) was found trying to short CRV. A large amount of CRV was borrowed from Aave and sold off. The price of CRV fell rapidly. But soon came the white knight. Michael Egorov, the founder of Curve added 20 million $CRV asset to avoid its price falling. After that, the …
Next, we did an in-depth analysis of how AAVE's $1.6 million bad debt was created and why we need a control system based on liquidity sensors and a feedback loop to mitigate the imminent risks.
Last but not least, we unveil a liquidation strategy that profited $1 million and liquidators’ significant role during the creation of AAVE's $1.6 million bad debt.
A Liquidation Strategy That Profited $1 Million During the Creation of Aave's $1.6 Million Bad Debt.
Background Starting on Nov 13, 2022, the CRV shorter deposited 63.596 million USDC on AAVE V2 and borrowed 92 million CRV. They sold about 20.45 million CRV on DEXs, causing the price of CRV to decrease from 0.59 to 0.43 USD. Around 11:00 on Nov 22, 2022, the CRV price began to increase, and the shorter's position triggered the liquidation threshold. A t…
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