How DeFi users are navigating post-Curve exploit landscape

Over $452.4 million has been withdrawn from Aave v2 following Curve exploits

article-image

Ivan Babydov/Shutterstock modified by Blockworks

share

Following the exploit of decentralized exchange Curve, many DeFi participants are trying to make sense of the landscape — and figuring out what to do next.

Curve was hacked for over $70 million last Sunday after a bug was discovered in its coding language, Vyper. 

Concerns about the ripple effects of the Curve exploit were apparent. The price of Curve’s native token, CRV, fell dramatically immediately after the exploit, from $0.73 to as low as $0.50. CRV is trading at $0.60 at the time of writing. 

Of top concern for many ecosystem participants was Curve founder Michael Egorov’s loan, worth an estimated $70 million USDT, which he borrowed using CRV as collateral on Aave v2. 

Read more: Curve’s Egorov turns to notable counterparties to bail out his DeFi positions

As might be expected, the Curve exploit has reshaped the DeFi landscape, at least for now.

Nick Cannon, the vice president of growth at Gauntlet, a crypto-financial risk management company, told Blockworks that one side effect of smart contract exploits is a drying-up of market liquidity.

“Post FTX, [liquidity] on DEXes and centralized exchanges completely evaporated, and when that happens, it’s not surprising that changes the risk profile of not just CRV, but the entire market,” Cannon said.

Where is the liquidity going?

Between July 30 and roughly 7 pm ET on Thursday, an estimated $452.4 million had been withdrawn from Aave v2 accounts, Cannon told Blockworks.

That figure includes:

  • $90.7 million to an unspecified location
  • $52.4 million staked in stUSDT
  • $166.2 million held in wallets
  • $128.8 million migrated to Aave v3
  • $7.3 million moved to Compound
  • $7 million moved to Binance

An additional $26 million in withdrawals from Morpho, $32.7 million from Egorov, and $12.1 million from Falmincome Protocol were not included in these calculations, Cannon notes. 

To prevent liquidation, Egorov has engaged in a series of over-the-counter (OTC) deals with various ecosystem participants to pay off his loans on lending protocols Aave, Fraxlend, Inverse and Abracadabra. 

Loading Tweet..

Lending protocols propose to purchase CRV with USDT

Both Aave and Fraxlend have governance proposals in motion that suggest purchasing CRV with USDT.

Marc Zeller, the founder of delegate platform Aave Chan Initiative, noted that this approach could allow Aave v2 to support the DeFi ecosystem and incentivize GHO liquidity.  

“A 2M USDT worth of CRV acquisition would send a strong signal of DeFi supporting DeFi, while allowing the Aave DAO to strategically position itself in the Curve wars, benefiting GHO secondary liquidity,” Zeller wrote.

A similar proposal has been suggested by Samuel McCulloch on Fraxlend. 

“To bolster the health of our lending market, as well as foster increased liquidity across all Frax assets, the DAO should use this opportunity to acquire CRV,” McCulloch wrote.

Cannon, however, notes that Gauntlet will continue to recommend that lending protocols disable, freeze, or similarly adjust their CRV and prevent additional collateral right now.

“Does the DAO want to get stuck holding one of the biggest positions in this collateral if the liquidity dries up for CRV?” Cannon said.


Get the news in your inbox. Explore Blockworks newsletters:

  • Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
  • Empire: Start your morning with the top news and analysis to inform your day in crypto.
  • Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
  • 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
  • Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
  • The Drop: For crypto collectors and traders, covering apps, games, memes and more.
  • Supply Shock: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.
Tags

Upcoming Events

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates.jpg

Research

Bluefin possibly stands at an inflection point. The token is near an all-time low yet the protocol’s spot volume market share and derivatives exchange usage have been increasing month over month since its November launch. Given its current market position and the upcoming upgrades (for both Bluefin and SUI), there may be upside potential before the increased supply growth in December. However, strong opposition from existing competitors (like Cetus and Suilend), as well as new entrants (like Aftermath), pose key challenges to Bluefin’s medium-term success.

article-image

Top Committee Democrat Sen. Elizabeth Warren in her opening statement accused Atkins of “helping billionaire CEOs like Sam Bankman-Fried”

article-image

Introducing garbled circuits for enhanced privacy and regulatory compliance

article-image

Ross Ulbricht was a freedom maximalist building freedom tech, powered by Bitcoin

article-image

Solana validators can reap benefits including payments, votes and community clout

article-image

Sponsored

WalletConnect is cementing itself as the essential connectivity layer, ensuring wallets remain the entry point for billions of users

article-image

According to a legal filing, Galaxy Digital helped boost the price of LUNA while quietly selling its tokens