What is Curve DAO Token (CRV)?
The Curve DAO token (CRV) is the governance token for the Curve platform. Curve Finance is a decentralized exchange (DEX) that uses an automated market maker (AMM). It’s considered to be one of the largest decentralized exchanges in the crypto space.
Curve Finance specializes in stablecoin trading. It allows users to swap crypto assets, provide the pools with liquidity, stake, and yield farm as part of the DeFi services. The network is governed by the decentralized autonomous organization (DAO), which uses the CRV token for voting on protocol changes and other blockchain proposals.
Who Founded Curve DAO Token?
Curve was founded by Michael Egorov. He’s a physicist who has been involved with blockchain technology development and cryptocurrencies for about a decade. He also founded LoanCoin, a decentralized loaning bank. His other venture, NuCypher, merged with Keep in 2021, leading to the formation of the Threshold Network.
While Curve Finance was founded in 2019, the shift towards a decentralized governance system occurred a year later. The CRV token was officially launched on 14th August 2020. Initially, the token was given exclusively to the liquidity providers. At the time of launch, the Curve DAO token price was just under $7.
The idea behind Curve Finance was to create a decentralized space for stablecoin trading. The choice to focus on stablecoins rather than the more volatile assets meant that using the services would pose investors fewer risks.
Egorov became the subject of controversy in late August 2020, when he took 71% of the governance tokens for himself, exponentially increasing his power in the DAO structure. This had a negative impact on the CRV price, with its value dropping to about $2.
Since its inception, the DAO asset has experienced several significant peaks and fallbacks. After the controversy surrounding Egorov’s assets, the CRV price recovered in early September and climbed back up to $5. However, just days later, its value fell below $1 and fluctuated between $0.50-$0.80 until mid-January 2021.
What Are the Uses of Curve DAO Token?
The overall supply of Curve DAO coins is capped at 3,303,030,299 CRV. The asset is deflationary, meaning that the Curve DAO token price is expected to increase over time, as its supply becomes more scarce.
The asset has shown high volatility since its inception. Although the platform deals with stablecoin trade, the governance token is not pegged to any other asset itself. Therefore, the Curve DAO token price tends to fluctuate a lot and is subjective to the overall market trends.
Curve Finance offers some of the most popular decentralized finance (DeFi) services. It acts as an automated market maker which employs smart contracts as liquidity pools. Furthermore, it offers yield farming and staking which allows users to increase their crypto earnings as rewards for contributing to the Curve network.
The primary use of CRV is for blockchain governance. This ensures that the Curve Finance network is fully decentralized. Users become eligible to participate in governance by locking their assets for between one week and four years. This is known on the blockchain as vote locking.
Although anyone can vote on network proposals regardless of how many tokens they have, the voting power depends directly on the amount staked and the timespan of staking. Users that stake more than 2500 CRV crypto assets are eligible to submit their own proposals for voting.
Curve Finance users can also increase their CRV crypto earnings by locking them into a smart contract. The tokens they receive in return are veCRV or vote-escrowed CRV. The longer that the users keep their tokens locked, the more rewards they can yield.
As an AMM, Curve Finance offers three types of liquidity pools – plain, lending, and metapools. Plan pools, such as TriPool, hold ERC-20 tokens. Lending pools allow users to earn interest from lending and trading fees and are categorized as the Compound pool, yPools, and AAVE pools.
MetaPools enable the trade of one token with another underlying base pool. It keeps the remaining fools from being spread too thin and enables the listing of tokens that are not as liquid.
All pools must adhere to the protocol. The CRV price for the fees cannot fall below 0.04% nor exceed 0.1%. Half of the fees are designated for the DAO as rewards for their governance participation.