Despite these gains, it is important to note that CRV is still far from its all-time high of $60.50, a peak it reached in August 2020.
Leading Ethereum-based decentralized exchange (DEX) Curve Finance has today celebrated its fourth anniversary. This occasion comes with a strategic reduction in CRV emissions, aimed at minimizing inflation and preserving the value of the token.
Since its inception in 2020, Curve Finance launched its native token, CRV, to introduce governance capabilities and incentivize participation on its platform. However, with these incentives came the challenge of managing inflation.
When CRV was first introduced, the platform issued around 274 million tokens annually. Fast forward to 2024, this figure has been drastically reduced to 162.7 million tokens per year. The reduction has led to a current emission rate of 375,000 CRV per day. This translates to an inflation rate of 6.35%, a stark contrast to the previous year’s higher inflation.
Impact on CRV Supply
The reduction in emissions has had a notable impact on the total supply of CRV tokens. Currently, the total supply stands at 2.09 billion, with a substantial portion, 930 million tokens, locked on the platform as vote-escrowed veCRV. This locked supply serves as an important component of Curve’s governance model, allowing users to stake their tokens.
With a significant amount of CRV locked, the circulating supply is now around 1.16 billion tokens. This adjustment aligns with the conclusion of all vesting periods on Curve’s platform, further contributing to the reduction in the token’s annual inflation rate from 20% to just around 6%.
The reduction in newly emitted CRV tokens is expected to alleviate the issue of vote dilution that has plagued the Curve Finance community, ensuring that stakers can preserve their weekly revenue share.
These developments followed Curve Finance’s June update, which shifted its fee distribution mechanism from the 3cr token to its native stablecoin, crvUSD. The move to crvUSD was aimed to boost user incentives while enhancing the stablecoin’s utility.
Market Reaction
The market has responded positively to the change in CRV tokenomics, with the token’s value experiencing a significant uptick. In the past 24 hours, CRV has seen its price surge by over 10%, currently trading at $0.3116. Trading volume has also spiked, with a 75% increase, bringing it to around $246 million.
Curve Finance’s native token also saw its market cap rise by around 10%, currently standing at $364.8 million. Moreover, while the broader crypto market is facing a downturn, the CRV token has recorded a 40% rise in its value in the past seven days.
Despite these gains, it is important to note that CRV is still far from its all-time high of $60.50, a peak it reached in August 2020. The token has been on a downward trajectory since then, compounded by challenges such as the major exploit Curve Finance faced last July.
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