Why has the old DeFi leader CRV risen? Which related tokens are worth paying attention to?

Author: Alex Liu, Foresight News

Curve Leads DeFi

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

The DeFi sector has performed remarkably, 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 only surpassed by THE, which benefited from Binance's listing, and Curve's ecosystem protocol Convex token CVX.

Why has CRV been able to rise, 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, using 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 worthy target to bet on.

Looking Back, Bearish Pressure Has Been Exhausted

Why did I dare to bottom fish when CRV 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 created by 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, thus cashing out through a gradual liquidation of borrowing positions. But from another perspective: 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 angle, the way to maximize interests is to work hard on BUIDL, allowing the CRV token to have a higher value when unlocked, the team's long-term value is highly tied to the protocol token.

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

CRV's trading volume on CEX has long been significantly higher than that of tokens with similar market capitalization, but the price has remained stagnant, suggesting that there has 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% locking 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 rights to Curve's revenue. Whenever the value of CRV rises, the intrinsic value corresponding to each CVX also increases. It is akin to a leveraged version of CRV, and in this round of increase, its growth has outpaced CRV.

CLever (CLEV)

CLever holds the most CVX, further nesting. Its market capitalization is relatively low.

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. Frax has the opportunity to self-close the loop and build a self-sufficient DeFi ecosystem flywheel. The ultimate form is a decentralized on-chain central bank (though it is still far from that).