An Insight into the Turbulent Times for Curve DAO (CRV)

Hello everyone, I’ve been digging into the recent happenings around Curve DAO (CRV) and thought I’d share what I found with you all.

The biggest news lately is Curve’s new stablecoin, crvUSD. Launched on May 18, 2023, crvUSD was intended to give Curve a competitive edge in the crowded DeFi space. The stablecoin was deployed on Curve’s UI and it’s worth noting that these pools are regular pools, not metapools. The aim is to distribute trust across various stablecoins, particularly for the PegKeeper contracts, which are designed to maintain the stability of a stablecoin’s value.

But crvUSD hasn’t had an easy start. Despite the innovation, Curve has faced some hurdles. For instance, the total value locked on the protocol fell by 6.3% in the last month, and the protocol’s overall earnings also saw a 20.6% decline during the same period. This has understandably led to concerns about Curve’s performance and the impact of its new stablecoin.

Adding to this, Curve had to redeploy crvUSD due to a glitch in the initial deployment script that could prevent vote-escrowed Curve (veCRV) token holders from earning rewards from liquidity pools containing crvUSD. The team is committed to fixing this and has assured the community that the issue will be resolved.

The other major event that has had a significant impact on Curve is the Wintermute hacking incident. In September 2022, Wintermute, a UK-based market maker, was targeted in a cyberattack that resulted in a loss of roughly $160 million. The hacker then became the primary liquidity provider for Curve’s trading pool, depositing the stolen funds into the protocol. This accounted for 28% of the $409 million supporting Curve’s 3pool.

This raised concerns within the Curve community as the protocol is permissionless and immutable, meaning anyone can deposit funds and the code cannot be altered after deployment. Despite these challenges, Curve’s CEO, Michael Egorov, pointed out that the transparency of blockchain transactions makes it difficult for the perpetrator to hide the stolen funds.

All of these developments have had a noticeable effect on the sentiment towards Curve and its token, CRV. According to Santiment, the sentiment for Curve was negative at the time of writing. Curve’s market share in the DEX market also fell from 34% to 9.4% in the last three months. The CRV token price has declined, but interestingly, whales seem to continue investing in the token.

These are turbulent times for Curve and it will be interesting to see how it navigates these challenges. As always, please do your own research before making investment decisions.

Let’s keep the discussion going in the comments. What are your thoughts on these developments?

Note: This post is for informational purposes only and should not be considered financial advice. Please conduct your own research before making any investment decisions.

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3 thoughts on “An Insight into the Turbulent Times for Curve DAO (CRV)”

  1. I thought I had read that the wintermute hacker had actual CRV token, and controlled 28% of the circulating CRV. Do you have a source? Because it’s not so bad if it’s just the 3pool I would think, since if the hacker is caught that would just remove liquidity rather than selling a quarter of all CRV to pay back creditors.

    As for CRVusd, just gotta see how it shakes out. I would imagine whales will be all over CRV dips since the money Legos built with it underpin a ton of defi

  2. Being permissionless is often sought after but inherently is at odds with manually blocking certain actions. It’s an interesting tradeoff, and there are some protocols with backdoors for this purpose. I wonder what the community thinks is the right solution

  3. The drop in market share is more to do with more competitors than anything else. Competition is good.

    Whales accumulating CRV speaks volumes.

    Time will tell, but next bill run I suspect CRV to do pretty well. It’s inflation rate is also due to drop significantly before then.


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