Written 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: news of institutional entry
After the release of the above news, CRV surged 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 bets on Curve's potential for institutional adoption.
In my article in August this year, 'Opinion: To get out of the imitation bear market, DeFi revival is needed', I predicted that traditional finance would chain onto existing DeFi infrastructure, using Curve, Pendle, and Aave as examples. Since then: Aave has established cooperation 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 dare to bottom buy when CRV keeps falling? The judgment in June was that the bearish sentiment and selling pressure on 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 is detailed later.
For a long time, the biggest hidden danger of Curve Finance has undoubtedly been founder Michael Egorov's massive lending position of borrowed stablecoins using staked CRV tokens, which was completely liquidated in June.
Some call liquidation '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 tiered liquidation of lending positions. But another perspective is: the project founder was forced to sell most of their tokens at the bottom.
Curve founder Michael Egorov still has locked CRV. From a different perspective, the way to maximize interests is to work hard on BUIDL, so that the CRV token has a higher value when unlocked, with the team's long-term value highly tied to the protocol token.
Michael Egorov sold nearly 1.6 million CRV OTC at a price of 0.4 USDT during last year's liquidation crisis in August. Buying at the end of June, the cost price was lower than that of most institutions/whales, while many institutions have already cut losses and exited.
CRV's trading volume on CEX was significantly higher than that of tokens with the same market cap for a long time, but the price remained stagnant, suggesting a thorough chip turnover.
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 circulating inflation of CRV is only about 3%.
Looking ahead, points of innovation and growth
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 does crvUSD and the soft liquidation mechanism lend? Recommended reading:
How to have endless money? No need to work, just lie down comfortably.
Curve Finance is also expanding into ecosystems outside of EVM.
Ecosystem projects, benefits are gradually transmitted
Convex (CVX)
Convex holds the most CRV, possessing the rights to Curve's earnings. Whenever the value of CRV rises, the intrinsic value of each CVX correspondingly increases. It is close to a leveraged version of CRV, and its increase in this round is higher than that of CRV.
CLever (CLEV)
Holds the most CVX, further nested. Market cap relatively low.
Frax Finance (FXS)
Frax Finance is the second largest holder of CVX. It also has the L2 chain Fraxtal, stablecoin product FRAX, dual-token model staking products (sfrxETH, frxETH), lending products... it has everything. Frax has the opportunity to self-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 now).
