Curve and yearn.finance are among the few decentralized finance projects that have interesting yield farming products to offer. Their volumes have shot upwards due to consistent community involvement. Nevertheless, the price of their governance tokens is reflecting the boom.
Anil Lulla, co-founder/COO of Delphi Digital – a New York-based digital asset research firm, attempted to provide a potential explanation behind the said divergence. In his latest article, titled “Do Vested Rewards Work,” Mr. Lulla dug into the very token distribution models of Curve and yearn.finance.
Curve is down about 90 percent from its record high. Source: CRV/USD on TradingView.com
Why Curve Crashed?
By putting his focus mainly on Curve and its governance crypto CRV, the researcher noted that the protocol ensures “insane inflation” by releasing about 2 million CRV every day. Nevertheless, it does not offset the supply with vesting, a phenomenon that allows the project to reward long-term stakers.
Mr. Lulla added that the absence of “vested rewards” creates a downside pressure on CRV,