Aave Chan proposes Aave treasury buys $2 million CRV from Michael Egorov

Aave Chan Initiative proposed on the Aave governance forum that the DeFi project's treasury should purchase $2 million of curve tokens (CRV) from Curve founder Michael Egorov.

The initiative is a delegate platform founded by Marc Zeller, the founder of blockchain consultancy firm Pandemic, which works with Aave Companies — the company that designed Aave. Zeller previously worked as integrations lead at Aave for three years and regularly contributes to the Aave governance system.

"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 [Aave's stablecoin] secondary liquidity," Zeller said.

The transaction would result in the acquisition of 5 million CRV, currently worth $2.8 million. Zeller suggested that these tokens could be locked up and turned into veCRV. These tokens are used as voting rights on the Curve platform, helping to direct where the platform hands out token rewards. This could be used to incentivize Curve users to provide liquidity for token pairs that involve GHO.

"As they’re meant to be used to vote on Curve Wars the most efficient approach is to convert them to VeCRV for the next 4 years for maximum voting efficiency," Zeller said.

Egorov has been selling large swathes of curve tokens in over-the-counter transactions to multiple crypto individuals, including Tron founder Justin Sun, crypto trader DCFGod and Mechanism Capital co-founder Andrew Kang.

This is to help address his large loan positions, where he has borrowed millions of dollars of stablecoins against a large portion of the CRV supply. If the price of CRV falls too low and the loans are liquidated, it could be damaging for the DeFi protocols that he has used for the loans. Chief among them is Aave. As a result it's no surprise that some governance participants are wary of Zeller's proposal. 

"Aave should think about ways to reduce its exposure to the risk of CRV liquidation, NOT increase its exposure even more," said one.

If the proposal finds agreement, it will need to pass a vote for it to be implemented.