In the past month, the price of Curve DAO Token (CRV) has swiftly risen from a low of $0.2 to $1.2, driven by a profound transformation in the DeFi world. Simply put, Curve Finance is gradually becoming the key gateway for institutional capital entering decentralized finance (DeFi), and behind this transformation is not only a surge in market sentiment, but also a deep integration of institutional capital and innovative mechanisms.

BlackRock's entry: The bridge between DeFi and institutional capital.

BlackRock's tokenized money market fund BUIDL, centered on tokenized U.S. Treasury bonds, opens a new window for institutional investors. However, under regulatory restrictions, the liquidity of BUIDL is limited: initially, it could only circulate among pre-approved investors, leading to a gap between it and the DeFi ecosystem.

At this point, Elixir comes into play. As an innovative solution, Elixir allows BUIDL holders to mint deUSD by collateralizing their assets (similar to obtaining liquidity from staked assets). More importantly, Elixir chooses Curve Finance as the core liquidity center for deUSD, bringing unprecedented traffic support for CRV and crvUSD.

The core logic of CRV's surge: the flywheel effect of crvUSD.

Many people wonder: why does the inflow of this institutional capital directly drive the price of CRV to soar? The reason lies in a powerful yield model: the flywheel effect of crvUSD.

  1. High yields attract capital influx.
    Through Curve Finance, investors holding deUSD or other supported stablecoins can easily purchase and stake crvUSD, with an annual yield of up to 15%. The source of this yield is the interest income generated by crvUSD in the market, especially during a bull market, where a large number of users use collateral like BTC and ETH to borrow crvUSD, creating substantial leverage demand.

  2. Positive feedback loop of exponential growth.
    As more capital purchases and stakes crvUSD:

    • the price of crvUSD will be above $1;

    • Curve's PegKeeper mechanism will issue more crvUSD;

    • New liquidity further lowers borrowing rates, attracting more capital to participate.

    This loop leads to exponential growth in the total quantity and yield of crvUSD, driving the total locked value (TVL) of the entire Curve ecosystem to climb continuously.

  3. Institutional demand drives long-term growth.
    BlackRock's BUIDL and other tokenized U.S. Treasury holders have brought in a substantial amount of institutional capital, which not only supports the expansion of crvUSD but also alleviates the selling pressure caused by collateral and borrowing in the market. The long-term yield demand from institutional investors opens up vast space for the expansion of crvUSD.

Bull market leverage and crvUSD expansion: a win-win.

The bottleneck for crvUSD growth has long been insufficient purchasing demand; however, BlackRock's involvement and Elixir's innovative mechanisms provide solutions to this challenge. When institutions begin to participate and chase a stable yield of 15%, the expansion of crvUSD truly takes off, further driving the market demand for CRV.

In a bull market environment, the demand for borrowing surges. On one hand, investors borrow crvUSD using BTC or ETH, leveraging their returns; on the other hand, more institutional investors purchase and stake crvUSD for stable returns. This dynamic two-way drive creates a positive feedback loop:

  • Increased borrowing demand pushes up interest rates.

    • Higher interest makes staking crvUSD more attractive;

  • More purchasing pressure lowers interest rates.

    • As capital flows in, the supply of crvUSD increases, further stimulating the lending market.

Institutionalization of DeFi accelerates.

Currently, the development of crvUSD is at a critical point. The addition of tokenized assets like BUIDL not only blurs the boundaries between stablecoins and traditional finance but also paves the way for the mainstreaming of DeFi. With its strong liquidity foundation and innovative yield mechanisms, Curve Finance is becoming the biggest beneficiary of this transformation.

This surge in CRV's price may just be the beginning. With more institutional capital inflow and the continued fermentation of the flywheel effect of crvUSD, Curve is expected to become a core player in the global stablecoin market, while CRV, as its governance token, is gaining unprecedented market value.

Curve Finance is no longer just a DeFi protocol; it is becoming a bridge connecting traditional finance and the crypto world. The surge of CRV from $0.2 to $1.2 is driven not only by market sentiment but also by the deep combination of capital inflow, mechanism innovation, and long-term growth logic. In the future, Curve and crvUSD may become iconic forces in the DeFi ecosystem, and the growth potential of CRV's value remains promising.