[Feature] Mango Markets Exploiter Strikes Again! But Is He Winning This Time?

The notorious Mango Markets exploiter, known as “Avi” (Twitter handle @Avi_eisen), strikes again. And this time, the victims are Curve Finance’s native token CRV and lending platform Aave. Just a short recap of what happened to Mango Markets in October, the Solana-based decentralised financial (DeFi) trading platform was exploited for about $116M. More details here: https://www.coinlive.com/news/detail/?id=15795

Avi admitted he was involved in the exploitation

On 13^th November, a multisig address belonging to Fortress DAO, entirely controlled by Avi, deposited 38.96M USDC into Aave. The action began as Avi started to borrow tons of CRV using the initial deposit. By repetitively using the collateral to finance additional loans – a finance technique known as rehypothecation – Avi managed to build up a position of over $100M in a week.

The initial deposits of 38.96M USDC:

https://etherscan.io/tx/0x8c35263bd033c2edcbd011a833d6051b1bafd7a400d075acd180ac3a1e9c3f6e

Within a few days of efforts, a total of 71.55M CRVs worth $39.35M before the dump transferred to OKX, a well-known centralised crypto exchange (CEX). Timeline:

Transaction details:

https://etherscan.io/address/0xba529566855d9d0bf3de1cc988e5f529f92bd80c#tokentxns

The above chart shows a pattern of the token price falling each time the CRV was transferred to OKX. There was a chance that Avi opened a short position of CRV/USDT perpetual swap contracts (perp) on OKX. A perpetual swap is a crypto futures contract without an expiry date, which value is derived from the underlying crypto asset. In this case, CRV is the underlying crypto asset. By shorting perp, Avi will gain profits if the underlying asset (CRV) falls in price, and vice versa.

OKX UI

According to on-chain data, the CEO of Curve Finance, Michael Egorov, had $48.2M worth of CRV supplied on Aave, with a liquidation price of $0.259/CRV. Many in the crypto space believed Avi’s ultimate goal was to liquidate Egorov’s position.

While everyone was expecting CRV to fall even lower, the plot twist, CRV’s price made a V-shaped recovery, liquidating shorties and fueling the price to go higher and higher. At the same time, the whitepaper of Curve Finance’s own stablecoin was opened public all of a sudden, adding more buying power to the heavily shorted token.

The whitepaper prepared in October by Egorov was suddenly open public

Avi’s collateral in Aave suffered a severe liquidation; likely, his entire position was liquidated. The official Twitter handle of Aave tweeted that “the liquidations were successful, but unfortunately, the size of the position left some excess debt within the protocol … the position was not covered entirely & 2.64M CRV (≈ $1.6M at current value) remains.”

The complete timeline:

Liquidation records:

https://debank.com/profile/0x57e04786e231af3343562c062e0d058f25dace9e/history

Suppose we are looking solely at on-chain data. In that case, Avi’s highly profitable trading strategy was not working as intended, paying a price of $38.96M for trying to take down the DeFi giant. However, is that what really happened?

There are a good lot of speculations out there; guessing Avi might have opened a long perp after dumping the last 30 million CRVs on OKX. It seemed like Avi was expecting the liquidations, too, as he tweeted, “couple more liquidations then up only” after most of his collateral was liquidated. Despite losing 40 million worth of collateral on Aave, Avi will be able to cover all his losses, even double or triple his principal, by leveraging his trade on the long perp. Guess no one, but Avi and OKX knew what was going on; let’s just hope Avi shares his trading transactions publicly one day.

Another infamous crypto personality, Do Kwon, salutes Avi’s big bet