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CRV holders can decide on Curve’s future fee capture, locking mechanism, destruction mechanism, etc. This means that the total amount of CRV may be deflationary in the future.
Original title: “CRV Value Capture”
Written by: Blue Fox Notes
At the time of writing the Blue Fox Notes, Curve’s locked assets reached US$1.24 billion, and the entire DeFi field was US$7.82 billion, and Curve accounted for about 15.8%. In the entire DeFi field, it is second only to Aave and Maker, and surpasses Uniswap and Balancer, both of which are DEX.
Curve in August tasted the taste of liquid mining
From August 14 to the present, Curve’s locked-in assets has only taken half a month, and it has surged six times, from more than US$200 million to more than US$1.2 billion.
Curve’s locked-in assets increased by 4 times within 2 days, DEFIPULSE
The biggest reason for the sharp increase in the amount of locked assets of Curve is that Curve launched CRV tokens on August 13. When the CRV token was launched, its locked assets increased from about US$200 million to more than US$800 million within 2 days. In just two or three days, Curve has tasted the sweetness of liquid mining.
Not only the amount of locked assets, Curve’s transaction volume is also among the top three, ranking second among the three DEX giants (Uniswap, Curve, Balancer).
Curve’s transaction volume in the last 7 days ranks second in DEX, DUNEANALYTICS
Curve’s transaction volume in the last 7 days accounted for 18.1% of the DEX market, DUNEANALYTICS
In the DEX market, Curve currently occupies 18.1% of the market share, and its trading volume in the most recent week exceeded $500 million.
Curve’s stablecoin transaction slippage is the lowest, which is lower than CEX. This is one of its most valuable places. Traders conduct large-value stablecoin transactions and tokenize btc (wbtc, renbtc, sbtc, etc.) transactions, and first choose Curve. This is its current market positioning and advantages.
In terms of the number of users, Curve has more than 12,000 users, which is almost the same as Balancer, but there is still a gap between Uniswap. However, Uniswap is currently facing various swap competitions, especially Sushiswap directly leveraging Uniswap’s liquidity (Sushiwap’s current mining liquidity exceeds $600 million, which exceeds Uniswap’s 66%), which will put pressure on Uniswap to increase. For Sushiwap, please refer to Blue Fox’s ” Sushiswap: Evolution of Uniswap?” “. While Curve’s advantage in the stablecoin trading market is relatively stable, mStable has not launched a sufficient impact on Curve as expected. (About mstable ” mStable: Will Curve feel pressure? “)
Curve has more than 12,000 users, DUNEANALYTICS
Curve’s siphon power
After the launch of the CRV token, Curve has driven a significant increase in the amount of locked assets in the entire DeFi field. The most obvious benefit is renBTC, and then wBTC.
Less than a week after Curve launched the CRV token, wBTC has increased its locked assets by approximately $100 million. The impact on renBTC is even more pronounced. Within 4 days of the launch of Curve, the amount of locked assets of renBTC soared from US$60 million to a maximum of more than US$170 million, a nearly three-fold increase.
wBTC and renBTC can meet the needs of Bitcoin holders to participate in DeFi activities. This part of users can maintain Bitcoin exposure while also earning liquidity income from mining. The launch of the CRV token basically completes the price discovery, and can infer the rate of return of user asset lock-in, which greatly stimulates user participation.
After Curve launched CRV tokens, wBTC locked up assets increased by 100 million US dollars, DEFIPULSE
After renBTC launched CRV tokens on Curve, the amount of locked assets has tripled, DEFIPULSE
CRV value capture
CRV is the governance token of Curve. There are four uses:
- Governance voting (with time weight, the weight decreases as the unlocking time approaches)
- Value capture mechanism (incentivize specific token pools)
- Lock-in incentives (incentivize long-term liquidity providers)
- Cost destruction (according to future governance decisions)
From the above information, we can see that CRV itself has great value as a Curve governance token. One of the most important points is that CRV holders can determine the future cost capture, locking mechanism, and destruction mechanism of Curve. This means that the total amount of CRV may be deflationary in the future, and CRV may charge transaction fees in the future. Of course, the specific evolution depends entirely on the community governance of CRV holders.
Therefore, when evaluating the value of CRV, we can see future possibilities. As long as Curve can maintain its top position in stable currency transactions and tokenized cross-chain asset transactions in the encrypted market, then CRV has the opportunity to capture greater value.
The CRV token was launched on August 13, 2020. The total number of tokens is 3.03 billion, of which 62% is allocated to liquidity providers, and 5% of liquidity mining is allocated to the liquidity before the CRV token launch Sex providers, these 5% of tokens have a one-year unlock period, and 57% of 62% are allocated to liquidity providers after the launch of CRV tokens. This part will be gradually released over the next 6 years ; 30% of the total amount is allocated to the founding team and investors (with an unlocking period of 2-4 years), 3% is granted to employees (with a 2-year unlocking period); 5% is used as a community reserve.
From the intuitive point of view of the picture, the unlock plan of CRV along the timeline is as follows:
Curve token release trend chart
Judging from its token release plan, by the end of 2020, there will be about 100 million CRVs. According to the current price, the diluted market value of this number is about 360 million U.S. dollars, which is roughly equivalent to the current market value of REN (380 million U.S. dollars). ).
As of the writing of Blue Fox Notes, the market supply of CRVs was 13,558,734, while the locked CRVs were 3,599,082, and the lock-up ratio was 26.5%. Assuming that the lock-up ratio remains unchanged, the true circulation of CRVs at the end of the year will be approximately more than 73 million. Assuming that the price of CRV remains unchanged, its circulating market value at the end of the year will be about US$265 million; assuming that the price at the end of the year doubles (US$7.2), then the circulating market value at the end of the year will be about US$530 million.
According to the current overall situation of DeFi, considering the fundamentals of Curve, this valuation is not high in the DeFi field. Currently, there is a premise that the DeFi bubble has not burst and the overall DeFi market can continue.
Increase CRV lock return
According to the design of Curve, if liquidity providers want to increase the return provided by their liquidity, they can obtain it by locking CRV. The longer the liquidity provider locks the CRV, the greater the amount of CRV locked, and the proportion of CRV token rewards it receives will increase, with a maximum increase of 2.5 times.