I think @MarcZeller raises some great points:
- One one hand, this could possibly cause the liquidation by not allowing more CRV to top up position
- On the other hand, this allows risk to balloon
- Perhaps the position will never reach liquidation point. CRV does have great demand drivers as any project or protocol seeking a peg/liquidity strategy should be incorporating a Curve strategy.
I think the comments about this being about ‘competition’ are misguided. There is a legitimate risk of bad debt, should liquidation occur. Hopefully it won’t and there’s probably no direct ill intent here, but wise to consider the possibility of both outcomes as this indirectly becomes a bet on CRV price.
This is a delicate situation as Marc points out that the users are free to do as they wish, this is defi after all, and it would be weird to target an individual. However, this is also using the product in a way that probably wasn’t intended, at least in this specific edge case where a user does have access to a large % of collateral in a not super liquid market.
Probably worth opening a conversation with Michael and seeing what his plans are.