On Nov.22 pundits illustrated at Lookonchain, tokens of the decentralized Industrial Trade Curve Finance (CRV) occur to have undergone a crucial short-seller attack.
Based on Lookonchain, ponzishorter. eth, an address linked with Mango Market’s exploiter Avraham Eisenberg, first exchanged 40 million USD Coin (USDC) on Nov. 13 into decentralized finance protocol Aave to borrow CRV for trading.
Market Dictators Manipulate The Market Movement
The deed allegedly propelled the price of CRV dropping from $0.625 to $0.464 during the week. Today, however, blockchain information reveals that ponzishorter.eth leased an additional 30 million CRV ($14.85 million) through two deals and transferred them to OKEx for selling.
The team at Lookonchain hypothesized that the exchange was aimed to drive down the token rate so many communities that using CRV as collateral would withstand liquidation.
In response to the massive selling action, a wallet united with Curve’s creator added 20 million more CRV in collateral.
On Aave, the wallet addresses’ health factor was 1.65 at the time of publication, indicating an excess of collateral against adoption.
But as told by blockchain examining judges firm Arkham, the laborssses may simply be bait, with Aave being the primary target instead. Arkham claims that Eisenberg built up an over $100 million role on Aave for an intricate trading system.
Furthermore, It first includes a distraction short of CRV tokens on Aave, which is illiquid on the outlet but also has very low limit requirements, both of which are significant aspects for the exploit.
Panic Selling Chain Reaction
Emerging attention would urge users to buy the drop en masse to maintain the price of CRV and, for others, to try to fasten the short-seller to cover their stance for a loss.
However, real affairs are influencing the probability that Aave cannot cover Eisenberg’s CRV short positions, as the platform allegedly does not have acceptable liquidity to purchase back more than 20% of the shortage. This would then promote bets against Aave and the rate drop its native token
To liquidate Avi’s stance, Aave liquidators will retain no way to purchase back all the CRV he obtained. AAVE will have to sell considerable proportions of tokens from the insurance module to wrap up this loss, wrote Arkham.