Curve Collateral Surges to $1 Billion Following DAO Launch

Last week it was Yam—but now it’s Curve Finance’s taking the spotlight in the rapidly changing world of decentralized finance.

Curve is a DEX liquidity pool on Ethereum which is designed for efficient stablecoin trading. The now third-largest DeFi protocol launched its long-awaited CRV governance token late last week and is currently enjoying the momentum.

Curve leverages a unique automated market maker (AMM) curve design (hence the name) which mitigates slippage for trading pairs like USDT/DAI and wBTC/renBTC that are pegged to the same value. It collects yields by lending collateral across protocols such as Compound, Aave, and dYdX while offering liquidity providers a mix of trading fees plus interest.

Curve TVL Cranking

Following Thursday’s rather intriguing and somewhat premature launch, TVL on the platform has pumped almost 300% to top out just below a billion dollars according to DeFi Pulse.

yEarn founder Andre Cronje [@AndreCronjeTech] was quick to offer congratulations:

Just a few short hours after @AaveAave

Congratulations @CurveFinance for $1B in deposits pic.twitter.com/oMn3ah66JW

— Andre Cronje (@AndreCronjeTech) August 16, 2020

DAI is one of the most popular stablecoins on the platform with over 78 million locked into smart contracts. In less than a week, the amount of DAI on Curve has increased by 730%, and it now represents 18.5% of the entire supply.

The momentum, as has been the case with most of its DeFi brethren, has come from yield farmers trying to grab a slice of the latest hot earning opportunity in the sector. For those that missed it, the CRV token launch occurred on Thursday when an anonymous account spent several thousand dollars in gas to deploy all of the Curve contracts. The team had no choice but to adopt the move and launch the token:

Someone deployed $CRV based on smart contracts we had published on github, front-running our efforts. While we initially were skeptical, it appeared to be an acceptable deployment with correct code, data and admin keys. Due to the token/DAO getting traction, we had to adopt it.

Curve then launched its liquidity mining front end and published a guide on how to harvest CRV. The governance token can also be locked into the Curve DAO to earn a multiplier on liquidity mining rewards for those wanting a longer-term investment. The team has yet to enable governance voting to prevent malicious actors, according to a statement on the official Curve DAO website.

Just Another Pump and Dump?

The FOMO driven momentum proceeded as expected as token prices and TVL skyrocketed. A listing on Binance quickly followed, adding even more liquidity and CRV surged to $23 before falling back to around $5 on the exchange. Other reports suggest CRV prices went as high as $50.

According to Dune Analytics, the total volume for the platform last week was over $185 million. The platform itself is reporting a daily volume of around $80 million.

Industry analyst Larry Cermak (@lawmaster) was typically critical of the inflationary tokenomics model adding that investors holding on to CRV for the long-term deserve to lose their money.

There might be a couple of listing pumps along the way but if you’re buying CRV to hold long term with this ape shit inflation, you seriously deserve to lose your money. This puppy will continue dumping pic.twitter.com/3cqBgrdHD8

— Larry Cermak (@lawmaster) August 16, 2020

Just a few hours after the launch, Cermak questioned the entire episode, including the quick Binance listing, and deleted a scam accusation tweet, before adding;

What you have to realize is that all the farmers will dump immediately at these prices as soon as a portion of their tokens unvests. These prices are absurd and once there is sufficient liquidity on Binance and CRV lists on Coinbase, it will be a feast on retail speculators.

Either way, Curve has become this week’s DeFi darling, flipping both Synthetix and Compound in the TVL charts.

DeFi TVL Tops $6 Billion

The total value locked across all DeFi platforms has hit another all-time high, this time topping $6.3 billion. This month alone, DeFi TVL has increased by 57% which has outperformed the digital asset markets which only made 11.5% in terms of total capitalization gains.

From what was largely a one player ecosystem, DeFi is now spread across multiple protocols and Maker’s market share has fallen to around 23.4% with a TVL just shy of $1.5 billion.

Aave is the second billion-dollar DeFi platform with a TVL gain of 10% on the day while Curve is now in the third spot. Synthetix, Compound, and Yearn Finance make up the top-six, and they’re all in the green today in terms of collateral added.

The amount of Ethereum locked into DeFi has remained at nearly 4.5 million ETH, or approximately 4% of the entire supply. Meanwhile, the amount of tokenized Bitcoin circulating around the DeFi ecosystem has also hit a peak of over 46k BTC.

With this type of momentum, it is likely that more platforms like Curve and Yam Finance will emerge in the coming weeks as the hottest sector in crypto continues to evolve.