Original author: Alex Liu, Foresight
Reprint: Lawrence, Mars Finance
Curve leads DeFi
Bitcoin stagnates before the psychological barrier of $100,000, while Alts catch up, causing BTC's market share to drop below 55% for a time.
The DeFi sector has performed brilliantly, rising over 20% in the past 7 days, while Curve Finance's token CRV led DeFi with over 50% weekly growth, second only to THE, which benefited from Binance's listing, and the Curve ecosystem protocol Convex token CVX among large-cap DeFi tokens.
Why can CRV rise, what is its potential, and which related tokens in the ecosystem are worth paying attention to? The author built a position in CRV below 0.3 and has held it for several months; here’s a brief explanation of the holding logic for CRV.
Direct factor: news of institutional entry
CRV has risen from 0.5 USDT all the way up to break through 0.8 USDT. Institutions like BlackRock are betting on the Ethereum ecosystem and entering DeFi through BUIDL funds. Curve serves as the infrastructure for stablecoin pairs and currency conversions, and the market bets on Curve's potential for institutional adoption.
Looking back, bearish selling pressure has been exhausted
Why dare to bottom buy when CRV continues to fall? The judgment in June was: the bearish factors and selling pressure of Curve Finance have bottomed out.
Note: Currently, Frax Finance has become the second-largest holder of CVX, while the largest holder is CLever. The holding logic of FXS will be discussed later.
For a long time, the biggest hidden danger of Curve Finance has undoubtedly been founder Michael Egorov's massive borrowing positions using CRV tokens as collateral to borrow stablecoins, which were completely liquidated in June.
Some refer to liquidation as 'clever cashing out', because there may not be enough liquidity to support such a large amount of tokens being sold, so it is cashed out gradually through lending positions. But another perspective is that the project founder was forced to sell most of his tokens at the bottom.
Curve founder Michael Egorov still has locked CRV. From a different perspective, the optimal way to maximize interests is to work hard on BUIDL, allowing CRV tokens to have a higher value at the time of unlocking, with the long-term value of the team and protocol tokens highly tied together.
Michael Egorov sold nearly 1.6 CRV OTC at a price of 0.4 USDT during last August's liquidation crisis. Purchasing at the end of June had a cost price lower than most institutions/big players, while many institutions had already cut losses and exited.
CRV's trading volume on CEX has long been much higher than other tokens of similar market value, but the price has continued to stagnate, suggesting a thorough exchange of chips.
Curve has been online for 4 years, and the inflation rate has dropped to 6.3%. Based on a 42.4% lock-up rate, the actual inflation of CRV in circulation is only about 3%.
Looking to the future, innovation and growth points
Market speculation expectations, what innovations and growth points does Curve Finance have in the future?
Potential on-chain foreign exchange products, soft liquidation mechanism lending LlamaLend, crvUSD. Since its launch, crvUSD has generated nearly $150 million in revenue for the Curve protocol.
The launch of scrvUSD helps promote the adoption of crvUSD. What advantages do crvUSD and the soft liquidation mechanism lending have?
Ecosystem projects, benefits gradually transmitted
Convex (CVX)
Convex holds the most CRV and has the revenue rights of Curve. Whenever the value of CRV rises, the intrinsic value corresponding to each CVX also rises correspondingly. Close to a leveraged version of CRV, it has risen more than CRV in this round of increases.
CLever (CLEV)
Holds the most CVX, further nested. Market value is relatively low.
Frax Finance (FXS)
Frax Finance is the second largest holder of CVX. At the same time, it has the L2 chain Fraxtal, a stablecoin product FRAX, a dual-token model staking product (sfrxETH, frxETH), lending products... it has everything. Frax has the opportunity to self-close the loop and build a self-sufficient DeFi ecological flywheel. The ultimate form is a decentralized on-chain central bank (though it is still far from that).
