The hack attack on decentralized exchange Curve Finance continues to create shock waves in the crypto community. Meanwhile, MakerDAO co-founder Rune Christensen made the bold prediction that the current situation could herald the much-anticipated bull season. Here are the details…
Bold prediction from MakerDAO founder: Final collapse before resurrection
In a recent Twitter post, Christensen likened the Curve events to a historic market cycle known as “Black Thursday” and said he believes it could be the last crash before a strong resurgence. Christensen used the following statements:
Curve is being abused. There is bad debt and liquidation risk in the ecosystem. This may seem like an “everything is over” moment, but maybe it’s just the Black Thursday cycle, the last crash before the bull market and everything comes back 100x stronger.
Curve getting exploited. Risk of bad debt and liquidations in the ecosystem.
This might seems like an “it’s over” moment, but perhaps it’s just this cycles Black Thursday – the last crash before the bull market, with everything coming back 100x stronger
— Rune (@RuneKek) July 31, 2023
What had happened?
As we reported on Kriptokoin.com, the hack of DeFi giant Curve Finance dealt a serious blow to the platform, resulting in a significant drop in the price of the native token CRV. This decline not only affected the overall valuation of the platform, but also put the $168 million loan position held by Curve Finance founder Michael Egorov at risk of liquidation. Egorov’s CRV token stash, which secures loans from various DeFi protocols, accounts for almost 34 percent of the token’s total market value, making the potential liquidation an event of immense importance in the DeFi space.
MakerDAO founder Rune Christensen, known for her views on the crypto industry and the DeFi ecosystem, pointed out that the hack and the ensuing risk of bad debt and liquidation could be perceived as a “last moment”. However, he was quick to argue that this might actually be indicative of a broader market cycle pattern. He compared it to the historical “Black Thursday” event. The “Black Thursday” cycle represents the slump before a bull market emerges, during which assets recover with extraordinary force, sometimes even multiplying in value.
Uncertainty in the market
While MakerDAO founder Christensen’s insight offers a beacon of hope to the crypto community, it is crucial to understand the complexity of the current DeFi landscape and the potential implications of Egorov’s massive exposure to CRV tokens. The recent exploit in Curve Finance and subsequent downward pressure on CRV’s price is adding to uncertainty in an already volatile market. This poses challenges not only for Curve Finance, but also for the wider DeFi ecosystem. In the event of Egorov’s liquidation, the seized assets would have to be sold in an already declining market, which would put further downward pressure on prices. Such a scenario could have a cascading effect on other DeFi protocols and potentially exacerbate ongoing market turbulence.
However, the crypto space has repeatedly shown remarkable resilience in the face of challenges. Past bear markets have been followed by explosive bull runs fueled by technological advances, increased adoption, and innovative projects rising from the ashes of previous failures. The ability to bounce back stronger has become a defining feature of the crypto industry, and many believe it will be no different this time around.
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