CRV - Curve wars and how it benefits CRV
Assets covered: Curve (CRV)
Metrics used: Price, Supply on Exchanges, Daily Active Deposit
One of the original Defi darlings, CRV took a hit recently with the crypto meltdown and is now seeing some signs of revival, but for how long?
Let's take a look.
CRV's price saw a nice run up this week with +62% gains since Monday to peak. While this bounce is encouraging, it still remains to be seen whether it can eventually break the resistance trendline and stay above it to confirm a reversal.
At this stage, it's still making a Lower High and Lower Low, which is typical of a bear structure.
CRV's supply on Exchanges continue to fall since topping out just right before the crypto meltdown. This is helping to alleviate any sell pressure on exchanges and may suggest that people are accumulating again.
While history may not repeat itself, it's important to note that he last major drop in Supply on Exchanges preceded a strong rally in price.
Supply on Exchange might be on a decline, but that's not stopping the more CRV holders from depositing every time there's a spike in price, suggesting that majority out there just wants to get out.
What might have contributed to the recent rally?
One of the major factors that might have contributed to the run up appears to be the market's realization of Convex Finance, which allows Curve.fi liquidity providers to earn trading fees and claim boosted CRV without locking CRV themselves.
You can learn more about it here.
While it launched on 17th May, it wasn't until 31st May that we saw a huge spike in TVL, indicating that most Curve.fi LPs are shifting to Convex to take advantage of the sweet yields and boosted CRV.
It has locked up 20M CRV since launch.
CRV holders are now incentivised to convert their CRV to crxCRV (which is a 1:1 representation of CRV) with a sweet APY of 156.75% APY.
Any CRV user that was considering to lock it up for 4 years can now do it via Convex and still have a way to get back CRV anytime they want..... as long as... the CRV/crxCRV markets maintains its peg.
Now, all this might sound familiar, that's because Yearn Valuts and its backscratcher came first. However, with Convex entering the space, it's bring healthy competition that eventually benefits CRV.
Here's a summary of the Curve Wars.
Disclaimer: The opinions expressed in the post are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.
Thanks for reading!
If you enjoyed this insight please leave a like, join discussion in the comments and share it with your friends!
Never miss a post from Sanfam!
Get 'early bird' alerts for new insights from this author