In a move to manage its exposure to risks associated with Curve DAO (CRV), Abracadabra Money, a cross-chain lending platform, has proposed hiking the interest rate on its outstanding loans by 200%.

“We have seen CRV collateral outflowing from our markets into markets with lower LTVs and higher interest [..] As such, we are suggesting to increase the interest rate in order to reduce Abracadabra’s total CRV exposure to around $5M borrowed MIM.”

Abracadabra’s proposal intends to apply collateral-based interest to both CRV cauldrons, specific instruments allowing users to borrow Magic Internet Money (MIM) using other assets as collateral.

This proposal comes after a liquidity crisis resulting from recent Vyper programming language exploits on Curve Finance, leading to the listing of CRV as collateral on Abracadabra.

Curve founder Michael Egorov found himself in a financial dilemma with approximately $100 million in loans backed by 47% of Curve DAO’s (CRV) circulating supply, exacerbated by the recent hack.

This issue surfaces as the DeFi protocol is recuperating from a recent $47 million hack. Egorov’s loans are spread across different lending protocols, including 305 million CRV backing a 63.2

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Author: Emily Tonelli

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