Curve leads DeFi
Bitcoin stagnated before the psychological threshold of $100,000, while Alts surged, causing Bitcoin's market share to briefly fall below 55%.
The DeFi sector has performed well, rising over 20% in the past 7 days, while Curve Finance's token $CRV led the DeFi sector with a weekly increase of over 50%, only outperforming $THE, which benefited from a listing on Binance, and the Curve ecosystem protocol Convex token $CVX among large-cap DeFi tokens.
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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 been 'CX' for months. Below is a brief discussion of the logic behind holding $CRV.
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Direct factor: news of institutional entry
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After the above news was released, $CRV surged from 0.5 $USDT to break through 0.8 $USDT. Institutions like BlackRock have bet on the Ethereum ecosystem and entered DeFi through BUIDL funds. 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, 'Viewpoint: Getting out of the Altcoin Bear Market Requires DeFi Revival', I predicted that traditional finance would go on-chain through existing DeFi infrastructure, citing Curve, Pendle, and Aave as examples. Since then: Aave has established cooperation with the Trump family, and Curve has introduced institutions like BUIDL to RWA. Pendle may be the next target worth betting on.
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Looking back, bearish sentiment and selling pressure have been exhausted.
Why was there confidence to buy the dip when $CRV kept falling? The judgment in June was that the bearish sentiment and selling pressure on Curve Finance had bottomed out.
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Note: Currently, Frax Finance has become the second largest holder of $CVX, with CLever being the largest holder. The logic behind holding FXS will be discussed later.
For a long time, Curve Finance's biggest hidden danger was undoubtedly founder Michael Egorov's massive borrowing positions secured by CRV tokens, which were completely liquidated in June.
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Some refer to liquidation as 'clever cashing out' because there may not be enough liquidity to support the sale of such a large amount of tokens, hence cashing out in stages through loan positions. However, another perspective is that the project's founder was forced to sell most of his tokens at the bottom.
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Curve founder Michael Egorov also has locked $CRV. From a different perspective, the way to maximize benefits is to strive to BUIDL, allowing the $CRV token to have a higher value upon unlocking, with the long-term value of the team and protocol token highly correlated.
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Michael Egorov sold nearly 1.6 $CRV OTC at a price of 0.4 USDT during the liquidation crisis last August. Purchased at the end of June, the cost was lower than most institutions/whales, while many institutions have exited with losses.
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$CRV's trading volume on CEX has been significantly higher than that of tokens with the same market cap for a long time, but prices have remained stable, suggesting that there has been sufficient chip turnover.
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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 circulation inflation of CRV is only about 3%.
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Looking ahead, innovations and growth points
Market speculation on what innovations and growth points Curve Finance has in the future?
Potential on-chain foreign exchange products, soft liquidation mechanism lending LlamaLend, crvUSD. Since its launch, crvUSD has generated nearly $150 million in revenue for the Curve protocol.
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The launch of scrvUSD helps promote the adoption of crvUSD. What advantages do crvUSD and soft liquidation mechanism lending have?
Recommended Reading: How to have endless money? No need to work, just relax comfortably.
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Curve Finance is also expanding into ecosystems outside of EVM.
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Ecosystem projects, positive news gradually spreading
Convex ($CVX)
Convex holds the most $CRV and has the rights to Curve's earnings. Whenever the value of $CRV rises, the intrinsic value corresponding to each $CVX also rises. It is akin to a leveraged version of $CRV, and its increase during this rally has outpaced $CRV.
CLever ($CLEV)
Holds the most $CVX, further stacking. Relatively low market cap.
Frax Finance ($FXS)
Frax Finance is the second largest holder of CVX. At the same time, it has Layer2 chain Fraxtal, a stablecoin product $FRAX, dual-token model staking products (sfrxETH, frxETH), lending products... it has everything. Frax has the opportunity to create a self-sufficient DeFi ecosystem. The ultimate form is a decentralized on-chain central bank (of course, it is still far from that).
[Disclaimer] The market has risks; investment should be cautious. This article does not constitute investment advice, and users should consider whether any opinions, views, or conclusions in this article fit their specific situation. Invest at your own risk.
This article is reprinted with permission from: (Foresight News)
Original author: Alex Liu, Foresight News
'The old DeFi leader takes off! $CRV surges over 50%, and three other ecosystem tokens are also worth attention.' This article was first published in 'Crypto City'.
