— Julien Bouteloup (@bneiluj) June 30, 2020
For our frequent readers, you may recall us covering CRV when they teased the governance token a month ago. Since then, we’ve seen CRV pop up in a number of places like the sBTC Curvepool incentives from Synthetix and Ren. Today, that rollout got one step closer with a formal proposal for the release of CRV – all of which is subject to change relative to the community feedback.
Here’s what you need to know.
Underpinning the Curve ecosystem is a DAO based on the Aragon framework. For those unfamiliar with Aragon, it’s a highly modular protocol allowing DAOs to customize their governance framework as needed. We’ve seen DeFi projects like PieDAO leveraging Aragon and with Aragon Court and the forthcoming release of a native Aragon blockchain for governance optimization, the choice to leverage Aragon rather than starting from scratch makes a lot of sense.
CurveDAO will use time-weighted voting to give those who lock their tokens more governance weight than someone who participates for the first time. This weighting is likely to be modified relative to how the community sees fit and is really geared at trying to mitigate the 1 token 1 vote model which drastically favors those with deeper pockets.
The current proposal suggests CRV will be issued with a supply of 1B CRV which will be gradually inflated to a max supply of 3.03B Curve. Inflation is set to be the highest in the first year and scale up over time, suggesting early adopters will see the most upside from protocol usage.
Just as with Compound and Balancer, CRV will be earned by those who provide liquidity to the protocol. As previously stated, this distribution model is likely to be retroactive, meaning those who have been providing liquidity to Curve will earn an allocation from the initial distribution.
Time for a quick announcement.
Curve is working on decentralizing its ownership through a Curve governance token. All liquidity providers since the inception in January 2020 will be considered for the initial distribution proportionally.
Details on supply/demand to follow soon!
— Curve (@CurveFinance) May 30, 2020
The key thing to keep in mind here is that in order to claim inflation, users will need to lock their LP tokens, similar to how Synthetix issues rewards for their liquidity incentives. We expect Curve will add a new feature specifically for this in the near future.
The paper suggests that Curve will collect all protocol fees and redirect them to the DAO, ultimately being used to burn CRV off the open market.
Taking a page out of the KyberDAO book, we expect that CRV tokenholders will have a say in how those fees will be distributed in the long term, possibly including voting incentives or direct dividends to tokenholders.
The Next Plantation
For those who have not been keeping an eye on Curve, it’s definitely time to start paying attention. As a leading aggregator of stablecoins and their newly implemented Bitcoin liquidity pools, Curve is quickly shaping up to be the most optimal market to exchange top tokens at minimal slippage.
Plus, with a suite of underlying programs like Synthetix’s sUSD and sBTC liquidity incentives, the value prop to supply liquidity to earn retroactive CRV is two-fold.
Please note that the model proposed today is still a work in progress and that anything mentioned above is subject to change.
Glad that people notice. Keep in mind, that's a draft. We didn't announce a release, CRV is not up yet, numbers in the pdf can and will change https://t.co/VWyb1fI0Rc
— Curve (@CurveFinance) June 30, 2020
Until then, get your tractor ready cause it’s farmin’ season!
Cooper is the Editor of DeFi Rate. He is an ambassador of Set Protocol and an active contributor to MetaCartel where he seeks to find emerging consumer-facing applications that propel the Ethereum ecosystem. He often works with projects as the Director of Fitzner Blockchain Consulting where he coauthors the weekly publication Token Tuesdays.
Like my writing? Drop me some gwei @ coopahtroopa.eth 😉