Curve DAO Votes To Enable Permissionless Rewards

Projects to Add Native Token Rewards To Existing Gauges

Curve DAO Votes To Enable Permissionless Rewards

Curve Finance, a decentralized exchange (DEX) that is DeFi’s third-largest protocol with $6B locked in its smart contracts, has concluded a governance vote to allow any project to add token rewards to its factory-deployed gauges.

This means that projects that wish to incentivize Curve liquidity pools with their native tokens can now do so directly with Curve, rather than forcing users to stake their liquidity provider (LP) tokens through another website to earn rewards.

Until now, projects needed approval from Curve governance, which is ruled by veCRV holders, to add their tokens as rewards to gauges. Users can obtain veCRV by locking up Curve’s native CRV tokens.

Reduced Friction

Generally speaking, the proposal will save projects’ time, wrote skeller0r, a member of the Curve team, on the protocol’s governance forum. Projects have had to either go through governance for the rewards, which can be a lengthy process, or write their own staking contract to add rewards separately. A custom staking contract also requires users to take the extra step of staking their LP tokens elsewhere.

Gauges are reward mechanisms that enable a pool to receive rewards of CRV, Curve’s native token, as well as other projects’ tokens. The allocation of CRV among the various gauges is dictated by veCRV holders through a weekly vote.

A factory pool is a user-generated pool of tokens. Creating a factory pool and gauge is permissionless, but making the gauge eligible for a share of CRV rewards still requires a governance vote, according to Curve’s documentation.

Existing Gauges

So, today’s vote only means that projects can freely tack their rewards onto existing approved gauges.

Convex Finance, which allows users to deposit their CRV tokens in order to get further boosted CRV rewards, was the largest “yes” voter for the proposal. StakeDAO, which curates yield-earning strategies across crypto, was the largest “no” vote.

With daily volume fluctuating between $25M and $224M in the past month according to The Defiant Terminal, Curve is the second largest DEX in DeFi.

Terminal Chart

Curve Dex Trade Volume

Curve Dex Trade Volume, Source: The Defiant Terminal

TVL Up, CRV Down

Curve CRV token has bled just over 28% in the last month. Over the same stretch, its peers have proved more resilient — Uniswap’s UNI is down 10% on the month and PankcakeSwap’s CAKE, which lives on Binance Smart Chain, is actually up just over 2.3%.

Terminal Chart

CRV Price
UNI Price
CAKE Price

CRV Price + UNI Price + CAKE Price, Source: The Defiant Terminal

However, Curve has outperformed in terms of TVL, gaining 5% while Uniswap has lost 10% in the past month.

Terminal Chart

Curve TVL
Uniswap TVL

Curve TVL + Uniswap TVL, Source: The Defiant Terminal