Part 10 of my deep dive research series will be on $CRV.
Can the Grandaddy of DeFi- @CurveFinance return to glory in 2023?
Let’s dive in…
Price = $1.01
Market cap = $760mm – Rank 69
All time high = $15.37 (-93%)
All time low= $0.331577 (204%)
Curve is DeFi's leading AMM exchange. It currently sits in 3rd position for all DeFi protocols with over $5.73b in TVL.
Curve v1 launched in 2020 and exploded in growth by focusing on stablecoin swaps with low fees and low slippage. Curve v2 was launched in 2021 and added pools into volatile assets such ETH and wBTC. It now has hundreds of pools across 12 of the main EVM chains.
Curve also developed innovative ways to incentivise and attract liquidity providers including.
Vote locking
Boosting LP rewards
Curve is a fascinating and complex protocol, so I recommend reading this thread by @IamZeroIka on bribes.
Revenue
Curve comes in 6th among all DEXES for fees generated- around $48k daily. While down significantly from ATHs, there is strong resilience during this bear market. 50% of all trading fees are collected and distributed to veCRV holders.
8.5 for Revenue.
Treasury
According to token terminal, Curve has around $126m in their Treasury. This is a very robust treasury for the current market conditions.
8.5 for Treasury.
Tokenomics
The total supply of 3.03b $CRV is distributed as such:
62% to community liquidity providers
30% to shareholders (team and investors) with 2-4 years vesting
3% to employees with 2 years vesting
5% to the community reserve
The initial supply of around 1.3b (~43%) was distributed as such
5% to pre-CRV liquidity providers with 1 year vesting
30% to shareholders (team and investors) with 2-4 years vesting
3% to employees with 2 years vesting
5% to the community reserve
The main purpose of the Curve DAO token- $CRV is to
Incentivise Liquidity Providers
Involve as many people as possible in governance
In order to achieve this, there are three main uses for $CRV
Staking
Boosting
Voting
To earn boosted rewards on your LPs, you can lock your CRV for an amount of time and receive veCRV. This then gives you voting power in the DAO and allows you to earn up to 2.5x boosted rewards on your liquidity.
8.5 for Tokenomics.
Locked up funds
According to Curve, these are the current supply stats
Circulating supply = 800m
Total CRV locked = 639m
Total supply = 3.03b
Market cap = $760m
FDV = $3.3b
Market cap/ FDV = 0.23
Around 50% of all CRV tokens have been unlocked (1.47b)- with the remainder to be emitted as per release schedule. Impressively, 44% of all circulating supply has been locked up for an average length of 3.55 years. Showing investors are confident in the long term success.
Some concerns that 50% of tokens are still to be emitted, however this is offset by the clever vote locking mechanisms which effectively reduces sell pressure on currently circulating supply.
7.5 for locked up funds.
Use case
Curve is now considered one of the blue chip DeFi protocols as it has stood the test of time and has pioneered mechanics around LPs, vote locking and DAO governance. Hundreds of liquidity pools have now been launched using Curve’s factory.
The primary chain is Ethereum but is now accessible across several popular side chains including Optimism, Arbitrum, Polygon and Fantom. TVL is sitting at $5.79b. Well down from its peak ($26b), but keep in mind we are at the tail end of a bear market.
9 for Use case.
Roadmap
One of the most anticipated upcoming features is the crvUSD stablecoin. It hasn’t been launched yet, but it is planned to be an over collateralized stable. Check out this thread by @Chinchillah_
It will be backed by $ETH first and then LP tokens later. One of the key innovations will be LLAMA which will be a continuous liquidation mechanism for debt positions that will prevent losses in market volatility.
7.5 for Roadmap.
Team & funding
Curve Finance began with the publication of Michael Egorov’s StableSwap Whitepaper in November 2019. The team is predominantly anonymous, and the protocol is governed by Curve DAO.
Curve have collaborated with many leading DeFi protocols including Compound and Yearn Finance and are constantly innovating. Check out @ThorHartvigsen thread where he has analysed the top CRV whale wallets.
8.5 for Team & Funding.
Summary
TLDR summary for each category’s score out of 10.
8.5 - Revenue – $50k daily fees- 50% to veCRV holders
8.5 - Treasury– $126m in Treasury
8.5 - Tokenomics – Fixed supply, lock up for boosted rewards
7.5 - Locked up funds – 50% tokens still to be emitted
9 - Use case – Biggest DEX by TVL
7.5 - Road map – crvUSD this year
8.5 - Team/ funding – Decentralised team & DAO
TOTAL- 8.5 weighted avg. score
You can view all my previous deep dive ratings for free below. https://docs.google.com/spreadsheets/d/1mPGbrsSEqBCN4lTVIIfdu3UzhZVqGP6LWMXlJrWJ5RE/edit?usp=sharing
Curve is a complex beast, and I must admit a lot of the technical detail still goes over my head. They have established themselves as the backbone of DeFi and I don’t see that changing any time soon. A very impressive project that I think will continue to succeed.
The purpose of this thread is for education and research- not financial advice. Always DYOR before Apeing in. Here is a framework I prepared earlier. The current macro conditions are still very choppy so stay safe out there frens.
Tagging some accounts to follow for all the Curve alfalfa.