Why is the veteran DeFi leader CRV surging? Which related tokens are worth watching?
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Why is the veteran DeFi leader CRV surging? Which related tokens are worth watching?
Curve is DeFi infrastructure, DeFi is the core use case of blockchain, and institutions are rushing in.
Navigating Web3 tides with focused insightsAuthor: Alex Liu, Foresight News
Curve Leads the DeFi Rally
Bitcoin stalled just below the psychological $100,000 mark, while altcoins caught up, pushing BTC's market dominance back below 55%.
The DeFi sector performed exceptionally well, rising over 20% in the past seven days. CRV, the token of Curve Finance, led the charge with a weekly gain exceeding 50%, outperforming most large-cap DeFi tokens—only surpassed by THE (boosted by Binance listing news) and CVX, the Convex token within the Curve ecosystem.
Why did CRV rise? What is its potential? And which related ecosystem tokens are worth watching? I established my CRV position below $0.3 and have been “CX” for several months. Below is a brief explanation of my CRV holding rationale.
Immediate Catalyst: Institutional Entry News
After the above news broke, CRV surged from $0.5 USDT to break above $0.8 USDT. Institutions like BlackRock are betting on the Ethereum ecosystem and entering DeFi via products such as the BUIDL fund. As Curve serves as critical infrastructure for stablecoin pairs and pegged asset swaps in DeFi, the market is pricing in strong potential for institutional adoption of Curve.
In an article I wrote in August titled "Opinion: Emerging from the Altcoin Bear Market Requires a DeFi Revival", I predicted that traditional finance would come on-chain through existing DeFi infrastructure, citing Curve, Pendle, and Aave as examples. Since then: Aave has partnered with the Trump family; Curve has brought in institutional RWA players like BUIDL. Pendle may be the next promising bet.
Looking Back: Selling Pressure Fully Priced In
Why dare to buy the dip when CRV was continuously falling? My assessment in June was clear: Curve Finance’s downside risks and selling pressure had bottomed out.
Note: Frax Finance is now the second-largest holder of CVX, with CLever being the largest. See later section for FXS holding rationale.
For a long time, Curve Finance’s biggest concern was founder Michael Egorov’s massive loan position, where he had collateralized CRV tokens to borrow stablecoins. This position was fully liquidated in June.
Some called the liquidation a "clever cash-out," arguing that there might not have been enough liquidity to support such a large token sale, so the position was gradually unwound via tiered liquidations. But another perspective is: the project founder was forced to sell off most of his tokens at the bottom.
Michael Egorov still holds locked CRV tokens. From his standpoint, the optimal strategy is to focus on building—so that when these tokens unlock, they carry significantly higher value. The team's interests are now strongly aligned with the long-term value of the protocol token.
During last year’s August liquidation crisis, Michael Egorov OTC-sold nearly 1.6 billion CRV at $0.4 USDT. Buying near the end of June meant entering at a lower cost than most institutions or large holders, many of whom had already exited at a loss.
CRV’s trading volume on CEXs was historically much higher than other tokens of similar market cap, yet prices remained flat for extended periods—suggesting thorough token distribution had already occurred.
Curve has been live for four years. Its inflation rate has dropped to 6.3%. With a 42.4% lock-up rate, the actual circulating inflation of CRV is only around 3%.
Looking Ahead: Innovation and Growth Drivers
Markets trade on expectations—what future innovations and growth drivers does Curve Finance have?
Potential offerings include an on-chain foreign exchange product, soft-liquidation lending via LlamaLend, and crvUSD. Since launch, crvUSD has generated nearly $150 million in revenue for the Curve protocol.
The introduction of scrvUSD will further boost crvUSD adoption. What advantages do crvUSD and soft-liquidation lending offer? Recommended reading:
How to Have Unlimited Money? No work required—just relax and enjoy.
Curve Finance is also expanding beyond EVM ecosystems.
Ecosystem Projects: Benefits Gradually Spreading
Convex (CVX)
Convex holds the largest amount of CRV and owns rights to Curve’s earnings. Whenever CRV increases in value, each CVX token gains correspondingly higher intrinsic value. It acts like a leveraged version of CRV and outperformed CRV during this rally.
CLever (CLEV)
Holds the largest amount of CVX—another layer of nesting. Relatively low market cap.
Frax Finance (FXS)
Frax Finance is the second-largest holder of CVX. Additionally, it operates the L2 chain Fraxtal, offers the stablecoin FRAX, runs dual-token staking products (sfrxETH, frxETH), provides lending services—and more. Frax has the potential to become a self-contained, self-sufficient DeFi flywheel. Its ultimate form could resemble a decentralized on-chain central bank (though it's still far from that today).
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