New Curve (CRV) Tokenomics

Yield Farmers may flock to the opportunity to earn 2.5x on already high APY through Curve Finance once vote locking is implemented on August 28th.

Until now, CRV has experienced heavy selling pressure as Farmers take profits and reinvest. Although Curve has high liquidity like other ecosystems, it’s token has not seen the same price appreciation. With vote locking implemented, there will soon be incentive to hold or buy CRV.

Users who lock CRV are rewarded with the veCRV governance token which gives holders time-weighted voting power and yield boost. At the time of writting, one needs about 20 CRV locked for 4 years to earn 2.5x boost on $1,000 USD. Alternatively, one could lock 75 for only one year.

Instead of voting with token amount $a$, in Curve DAO tokens are lockable in a VotingEscrow for a selectable locktime …. In other words, the vote is both amount- and time-weighted, where the time counted is how long the tokens cannot be moved in future.

So voting and yield boost is a function of three factors:

  • Liquidity Provided vs Total Pool Liquidity
  • Voting Balance (vote locked CRV) vs Total Voting Balance
  • Time since CRV was locked

The more CRV become vote locked, the more each individual account will need to lock in order to achieve the maximium yield.

New tokenomics means the market will have to reasses the value of CRV. I expect the price will be impacted significantly in favor of CRV holders.

CRV vote locking with yield boost should begin around August 27th at 11 pm UTC