Curve Finance ($CRV) Curve.Fi – Oh My God, another governance token? (Launching Early August)
Yes another one, but this one has a lot of upside that I wanted to share because some of the good information can get lost in the noise.
A lot of attention is put on TVL (Total Value Locked) when referencing value in these tokens but the truth is that is not a sustainable way to get an indicative value.
If you look at the tokenomics of the project the value needs to align to it’s earning capability over time, that is why $YFI has been so popular (I have a follow up to this token at a later time I think most will find interesting).
Dune Analytics is a great source of data for these defi projects with total market volume in the last 24 hours at $257Million across all DEXsAs you can see Uniswap has the lions share, but Uniswap does not have a token yet and one of the inherent risks to your funds as an LP is impermanent loss.
This is also relevant in most pooled DEXs with BancorV2 due out soon that has a different approach to solving this.
If we compare the next best to Curve (2nd) being Balancer (3rd) we get an understanding of TVL vs Volume and revenue generated:- Balancer $450million total overall volume and $261Mill TVL- Curve $1.5Bill total overall volume and $220Mill TVLIn the Balancer chart you can see that the total revenue apart from the one spike at launch of the BAL token is around about $9k per day with it increasing in the last week to an average of $20k.
Curve Finance has been earning around $20k per day on average since late June amassing $60k revenue on the launch of the $YFI token.
So why is it that Curve is getting the volume over Balancer and other LPs (other than Uniswap) compared to the rest? It comes down to the fact they offer something that is hard to offer, no impermanent loss. It’s not done by a trick but a choice to only pool like for like assets, such as USDT, DAI, USDC etc. or wBTC, sBTC, renBTC.
It allows the LPs to provide liquidity without that risk and by doing this they can offer stable coin swaps at very low slippage for large amounts. Bonding curves are the reason for this and I have included a link to a youtube video below that explains this better than I.
The fact they have this liquidity for stablecoins to be used amongst all DEXs means they are almost an intersection for USD swaps and it is a regularly used weapon in the art of flash loans.
The more that DEXs are used and L2 solutions provide lower cost and faster transaction we would likely see these volumes start to increase significantly.$CRV will be launched with 0 supply and the first supply being those earned on the first day (2 million).
Those that have been LP’s before the launch will have their tokens vested for 12 months and all team funds (3%) are vested over a 2-4 year period with investor funds (31%) subject to a 2 year vesting period. (61%) of the distribution however will be allocated to LPs as rewards ongoing and there is a 5% emergency allocation that can be burned.
There is no public sale at all with total dilution to be 3 billion tokens. $CRVs Tokenomics?
- Governance with time-weighted voting
- Value capture mechanism to promote certain pools
- Locking mechanism to accrue rewards for long term liquidity providers
- Fee burn (once enabled by governance further down the road)
I can see this token potentially being undervalued by the market at first due to the misconception of TVL vs Earnings type valuation style. In my opinion this protocol fills a need and has utility to capture not only the income from the fees but also with the team and investors on receiving 34% of the total supply and vested for 2 years minimum the community will get the chance to govern this protocol as well.
There are many risks with this much the same with most DeFi products so please if you are using them understand what you are doing and make sure it’s money you can afford to burn. If you are interested in just holding I imagine it will come on the Uniswap market relatively quickly.
Happy Friday All
Update!!!! CRV Finance has been launched. It is on Uniswap – I had this ready to go as an alarm. Here is the contract address for the CRV DAO for anyone interested finding it on Uniswap. 0xd533a949740bb3306d119cc777fa900ba034cd52