Curve Leads DeFi

Bitcoin stagnates before the psychological threshold of $100,000, while Alts catch up, causing BTC's market share to temporarily fall below 55%.

Bitcoin price struggles to break past the psychological threshold of $100,000, while Alts catch up, causing BTC's market share to temporarily fall below 55%.

The DeFi sector has performed well, rising over 20% in the past 7 days, with Curve Finance's token CRV leading the DeFi sector with a weekly increase of over 50%. Among large-cap DeFi tokens, its performance is second only to THE, which benefited from Binance's listing, and Curve's ecosystem protocol Convex token CVX.

Why has CRV risen, what is its potential, and which related tokens in the ecosystem are worth paying attention to? The author built a position in CRV below 0.3 and has been "CX" for several months. Below, I will briefly discuss the logic behind holding CRV.

Direct Factor: Institutional Entry News

After the news was released, CRV surged from 0.5 USDT to break through 0.8 USDT. Institutions like BlackRock are betting on the Ethereum ecosystem and entering DeFi through the BUIDL fund. Curve serves as the infrastructure for stablecoin pairs and currency exchanges, and the market is betting on Curve's potential for institutional adoption.

In my article "Viewpoint: To Exit the Altcoin Bear Market, DeFi Needs to Revive" from August this year, I predicted that traditional finance would go on-chain through existing DeFi infrastructure, citing Curve, Pendle, and Aave as examples. Since then, Aave has established a partnership with the Trump family, and Curve has introduced institutions like BUIDL into RWA. Pendle may be the next target worth betting on.

Looking Back, Bearish Pressure Has Been Exhausted

Why was I confident in bottom-fishing CRV when it was continuously declining? The judgment back in June was that the bearish sentiment and selling pressure on Curve Finance had bottomed out.

Note: Currently, Frax Finance has become the second-largest holder of CVX, with CLever being the largest. The holding logic for FXS will be discussed later.

For a long time, the biggest risk for Curve Finance was undoubtedly the massive borrowing positions of founder Michael Egorov, who mortgaged CRV tokens to borrow stablecoins, and these positions were completely liquidated in June.

Some have referred to the liquidation as "clever cashing out," as there may not have been enough liquidity to support the sale of such a large amount of tokens, leading to a gradual liquidation through borrowing positions. However, another perspective is that the project founder was forced to sell most of his tokens at the bottom.

Curve founder Michael Egorov still has locked CRV. From a different perspective, the way to maximize interests is to work hard on BUIDL, allowing the CRV token to have a higher value when unlocked, the long-term value of the team is highly tied to the protocol token.

Michael Egorov sold nearly 1.6 million CRV OTC at a price of 0.4 USDT during last year's liquidation crisis. Buying at the end of June had a lower cost basis than most institutions/whales, while many institutions had already cut losses and exited.

CRV's trading volume on CEX had been significantly higher than tokens of similar market cap for an extended period, but the price remained stagnant, suggesting that there had been sufficient turnover of chips.

Curve has been online for 4 years, and the inflation rate has dropped to 6.3%. Based on a 42.4% lock-up rate, the actual inflation entering circulation for CRV is only about 3%.

Looking Ahead, Innovations and Growth Points

What innovations and growth points does Curve Finance have in the future, according to market speculation?

Potential on-chain foreign exchange products, soft liquidation mechanism lending LlamaLend, crvUSD. Since its launch, crvUSD has generated nearly $150 million in revenue for the Curve protocol.

The launch of scrvUSD helps promote the adoption of crvUSD. What advantages do crvUSD and the soft liquidation mechanism lending have?

Curve Finance is also expanding into ecosystems outside of EVM.

Ecosystem Projects, Positive News Gradually Spreading

Convex (CVX)

Convex holds the most CRV and has the right to Curve's earnings. Whenever the value of CRV rises, the intrinsic value corresponding to each CVX also increases. It is akin to a leveraged version of CRV, with a higher increase in this round of growth compared to CRV.

CLever (CLEV)

Holds the most CVX, further nested. Relatively low market cap.

Frax Finance (FXS)

Frax Finance is the second-largest holder of CVX. It also has the L2 chain Fraxtal, a stablecoin product FRAX, a dual-token model staking product (sfrxETH, frxETH), lending products… it has everything. Fra