CRV Emissions Drop By 16% As Token Turns Three

Three years after Curve Finance launched its CRV token, a preprogrammed change has reduced the annual issuance of the digital asset by 16%.

Meanwhile, the flurry of OTC deals for a token central to many DeFi mechanisms doesn’t appear to be over.

Binance Labs, the venture arm of crypto’s largest exchange, bought $5M worth of CRV from Curve founder Michael Egorov on Aug. 10 in two separate transactions. Curve will launch on the BNB Chain as part of the deal, which at $3.2B is the third-largest blockchain by value locked.

Since an exploit on July 30 saw millions of dollars drained from Curve liquidity pools and pressured the price of CRV, Egorov has sold just over 156M CRV in discounted OTC deals which began last week.

Egorov needed the proceeds to pay down tens of millions in debt to minimize the chances of liquidation on his CRV-backed loans.

The buyers’ motivations are less clear — recipients of the token don’t appear to have standardized terms for what they can do with their CRV — Machi Big Brother, a major NFT trader, locked his tokens for additional rewards and voting power. Wintermute, a trading firm, deposited CRV on an exchange.

0xSifu, a trader and former head of the Wonderland project, has said that the OTC deals come with a six-month lockup of the tokens.

In a conversation with The Defiant, Tyler Reynolds, an angel investor and crypto advisor, noted that the Curve exchange could continue to function even if CRV’s price dropped to nearly zero.

“It’s not like the protocol disappears if CRV is $0.01,” he said.

CRV is used to incentivize investors to deposit their assets in various Curve liquidity pools. Which pools those CRV rewards go to is determined by holders of a locked form of the token called veCRV. Directing the rewards through veCRV is a big business which projects fight over in a dynamic called “The Curve Wars.”

If CRV drops, the incentives don’t have as much value, which means people are less likely to deposit liquidity into Curve. "The concern at large is definitely that a low CRV price hurts the liquidity incentives, not that the protocol stops working," Reynolds said.

Egorov has paid back roughly half of what was $90M in stablecoin loans last week.

The OTC deals may not be done — a contentious governance vote for the Aave money market protocol to purchase $2M of CRV passed on Aug. 11.