By Alex Liu, Foresight News
Curve leads DeFi gains
Bitcoin stagnated at the psychological level of $100,000, while Alts caught up, causing BTC's market share to fall below 55%.
The DeFi sector performed well, rising by more than 20% in the past 7 days, and Curve Finance's token CRV led the DeFi sector with a weekly increase of more than 50%. Among large-cap DeFi tokens, its performance was second only to THE, which was positively affected by Binance's listing, and Curve ecosystem protocol Convex token CVX.
Why can CRV rise, what is its potential, and what other related tokens in the ecosystem are worth paying attention to? The author built a position in CRV below 0.3 and has been "CX" for several months. The following is a brief explanation of the logic of holding CRV.
Direct factor: Institutional entry news
After the above message was released, CRV rose from 0.5 USDT to break through 0.8 USDT. Institutions like BlackRock are betting on the Ethereum ecosystem and entering DeFi through the BUIDL fund. Curve is the infrastructure for DeFi stablecoin pairs and pegged currency exchanges, and the market is betting on Curve's potential for institutional adoption.
In my article in August this year titled 'Viewpoint: To Emerge from the Altcoin Bear Market, DeFi Needs Revitalization', I predicted that traditional finance would go on-chain through existing DeFi infrastructure, using Curve, Pendle, and Aave as examples. Since then, Aave has established a partnership with the Trump family, and Curve has introduced institutions like BUIDL for RWA. Pendle may be the next target worth betting on.
Looking back, the bearish selling pressure has been exhausted.
Why did I dare to bottom-buy when CRV was continuously falling? The judgment in June this year was that the bearish news and selling pressure for Curve Finance had bottomed out.
Note: Currently, Frax Finance has become the second-largest holder of CVX, with CLever being the largest holder. The holding logic of FXS will be discussed later.
For a long time, the biggest hidden danger for Curve Finance has undoubtedly been founder Michael Egorov's massive borrowing position using CRV tokens to borrow stablecoins, and these positions were completely liquidated in June.
Some refer to the liquidation as 'clever cashing out', as there may not be enough liquidity to support the sale of such a large amount of tokens, thus cashing out through a step-by-step liquidation of borrowing 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 way to maximize benefits is to focus on BUIDL, allowing the CRV token to have a higher value upon unlocking, which tightly binds the long-term value of the team and protocol tokens.
CRV's trading volume on CEX had been significantly higher than that of tokens with the same market capitalization for a long time, but the price remained stagnant, suggesting a sufficient turnover of chips.
Curve has been online for 4 years, and the inflation rate has dropped to 6.3%. Based on a 42.4% locking rate, the actual inflation of CRV entering circulation is about 3%.
Looking ahead, innovations 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?
Curve Finance is also expanding into ecosystems beyond EVM.
Ecosystem projects, positive news is gradually being transmitted.
Convex (CVX)
Convex holds the most CRV, possessing the income rights of Curve. Whenever the value of CRV rises, the intrinsic value corresponding to each CVX also rises accordingly. It is close to a leveraged version of CRV, with a higher increase in this round of price rise than CRV.
CLever (CLEV)
Holds the most CVX, further nesting. Market capitalization 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, dual-token model staking products (sfrxETH, frxETH), lending products... it has it all. Frax has the opportunity to self-close the loop and build a self-sufficient DeFi ecosystem flywheel. The ultimate form is a decentralized on-chain central bank (though it is still far from that).
