This week CRV price rallied toward a new 1-year high, but what’s behind the move?
This week, cryptocurrency traders turned their focus to the pack of dog-themed meme tokens as altcoins like Shiba Inu (SHIB) and Dogecoin (DOGE) saw a surge in volume which resulted in SHIB hitting a new all-time high and the remaining Dogecoin clones booking some juicy gains.
Traders are now debating whether the launch of the first Bitcoin (BTC) exchange-traded fund (ETF) kicked off the next leg of the bull market or if meme-tokens rallying is a top signal.
While SHIB, DOGE and Samoyedcoin are the hot flavors of the week, there are other tokens, which are equally bullish and posses stronger fundamentals. Take, for example, Curve protocol's native CRV token, which broke to a near yearly high earlier this week.
Data from Cointelegraph Markets Pro and TradingView shows that since hitting a low of $2.05 on Sept. 26, the price of CRV has climbed 168% to hit a yearly high of $5.51 on Oct. 28 as its 24-hour trading volume spiked 89% to $1.3 billion.
A few reasons for the uptrend in CRV price include the fact that a majority of the circulating supply of CRV is locked, “Curve wars” that have DeFi protocols competing for CRV deposits and the rising total value locked on the Curve protocol.
Multi-year staking decrease CRV's circulating supply
A major factor behind CRV's rally is Curve's incentives for holders that lock their tokens on the protocol long-term and earn rewards from staking.
As a result of these incentives, more than 347.8 million CRV, or 88.75% of the circulating supply, is currently locked on the Curve protocol with an average vesting time of 3.68 years, according to data from Curve.
Convex Finance leads the "Curve Wars"
Another reason for the uptrend in CRV price is the ongoing Curve war between protocols like Yearn.finance and Convex Finance who find themselves competing to offer the most attractive yields to entice CRV holders to lock tokens in their vaults.
It has been 160 days since @ConvexFinance launched. In that time, 69.3m CRV has been farmed.
— CryptoCondom (@crypto_condom) October 24, 2021
At the current rate, $CRV is being farmed at 433k per day...so $CVX emissions will be 80% complete in 70.9days at 100m $CRV farmed....which means January 3rd will be a REALLY GOOD day pic.twitter.com/7fphyoK48c
This has caused a bit of a supply squeeze and it makes sense that the dynamic could continue to pick up pace, especially now that popular DeFi platforms like Abracadabra.money are also increasing their marketshare of CRV deposits.
Essentially, each protocol is "bribing" CRV holders by offering attractive yields so that they will use the governance power granted by staking CRV and holding VeCRV to vote for a higher allocation of stablecoins to the DeFi protocol in question. Many have referred to this process as "buying votes."
Related: US regulators are exploring policy for banks to handle crypto, says FDIC chair
Curve's TVL soars
The total value locked (TVL) in Curve also continues to surge and the platform hosts some of the largest stablecoin pools in the DeFi ecosystem.
Data from Defi Llama shows that the TVL on Curve is now at a record high $18.84 billion, making Curve the second-largest protocol by TVL.
The uptick in TVL was caused primarily by Curve’s success in integrating with many of the top layer-one and layer-two protocols with active DeFi ecosystems including Ethereum (ETH), Avalanche (AVAX), Harmony (ONE), Polygon (MATIC), xDAI (STAKE) and Fantom (FTM).
According to data from Cointelegraph Markets Pro, market conditions for CRV have been favorable for some time.
The VORTECS™ Score, exclusive to Cointelegraph, is an algorithmic comparison of historical and current market conditions derived from a combination of data points including market sentiment, trading volume, recent price movements and Twitter activity.
As seen in the chart above, the VORTECS™ Score for CRV elevated into the green zone back on Sept. 22 and reached a high of 84 on Sept. 26, around 48 hours before its price began to increase by 150% over the next month.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
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