Curve Finance: The $250 Million Bribe You Can’t Miss

  • Bribes paid to vlCVX holders are starting to decrease.
  • In addition, the Curve protocol is reportedly struggling as the number of users of the protocol is declining.

According to data from Delphi Digital, a large amount of bribes totaling $250 million was paid to vlCVX holders.

Read CRV’s Price Forecast 2023-2024

Bribes serve as an incentive to vote on poll weights and as a secondary effect can lead to the injection of more liquidity into pools.

This can happen at the base layer of the Curve as well as through Votium on the Convex, which is one layer above it.

The individuals offering the bribe are betting that the additional liquidity their offering generates, thanks to the additional CRV rewards, will be more valuable to them than the bribe itself.

The individuals can earn a bribe by holding onto the vlCVX token, a tool of Convex Finance.

The majority of bribes were collected in the fourth quarter of 2022. With the end of the first quarter of 2023 approaching, the total number of bribes sent dropped dramatically. One of the reasons for this would be the declining APR generated by vlCVX’s bribery income.

Based on the data from Dune Analytics, it was found that the APR of the vlCVX token fell from 30.72% to 23.17% over the past few months.

Source: Dune analysis

This decline in the vlCVX APR and resulting fees could indicate that the Curve protocol is struggling.

Bends and forks in the road

Another indicator that the Curve protocol is facing challenges is the drop in its share of the DEX space. Year-to-date, Curve Finance’s dominance of the DEX markets in terms of volume has fallen from 15.2% to 6.2%.

Uniswap and other successful DEXs managed to gain a large share of the market share during this period.

Source: Dune analysis

Curve’s problems in the DEX market can be attributed in part to a decline in its user base. Based on Messari’s data, it was found that the number of unique users on the Curve Finance platform had decreased by 0.21% over the past month.

This decline also impacted the protocol’s trading volume, which fell by 0.39% over the same period

The problems were not only limited to the protocol, as the associated token also experienced problems.

Is your wallet green? Check out the Curve Profit Calculator

Santiment’s data indicated that there was a decline in both network growth and speed for CRV. So this suggests a drop in overall activity and interest from new addresses.

Source: Sentiment

Leave a Comment