Thanks to the ongoing DeFi bloody season, several tokens have witnessed price deep dive in the bearish realm. Curve Finance’s native CRV token’s price movement, for one, was nothing short of a flat line. It bounced off a new all-time low yet at around $0.33 following which it surged up to $0.623 [an increase of 88.7%] with high breakout volume.
High Sell Pressure for CRV
To top that off, recent data showed that market participants were still dumping the token as soon as they got it and this trend is not slowing down for the time being. However, on the brighter side, the recent uptick in the token locked is a “positive sign.” This was noted by the Crypto Analytics Platform, Santiment, which revealed that CRV had been a downtrend since listing, and this is due to the amount of selling pressure/inflation factors that we will cover later.
The token’s total supply is set to $3.03 billion, 62% of which will be distributed to community liquidity providers. While 30% will be directed to the shareholders [team and investors] with 2-4 years vesting, 3% will be distributed to the employees with 2 years vesting, and the rest 5% to the community reserve.
It is important to note that the initial release rate is set to be around 2 million CRV per day. The report said that with the high inflation, there’ll be strong sell pressure until the protocol matures and significant demand in a thriving crypto market arrives.
But things changed when the market cap increased. The report went on to state that,
“The real winners here are the shorters but… once things unwind (like the during latest rally), those shorts can quickly turn into liquidations that pushes the price further upwards. The way CRV tokenomics is structured, it actually discourages buying from the market. Instead, it’s more worthwhile to obtain it by being a liquidity provider on Curve.fi.”
Market cap up 10x overnight
Your bags down another 50%
Tell me how dilution doesn’t matter again 😄 pic.twitter.com/09YV0xkxFO
— Jason Choi (@mrjasonchoi) August 15, 2020
Top Holder’s Holds Bearish Outlook
Further adding to the persistent downtrend were the top non-exchange addresses that have continued to offload tokens since launch and the report noted that this trend is likely to continue given the inflation and vesting schedules.
Another interesting factor that was noted by Santiment was that each time the investors vesting address distributed the token, the price of the token took a dip. On a positive note, the veCRV contract has locked around 34.79M CRV [i.e., 22.86% of circulating supply], with an average lock time of 3.63 years from 2,950 unique addresses which is good as burning CRV.
Despite the fact that the Curve team remained the single largest CRV vote locker with 14.70% of the entire veCRV distribution, it is also important to take into consideration, the fact that 42.24% of veCRV belongs to other addresses.
The growth curve in the token being locked up in the past week has also been steady. This was due to admin fees [collected from 50% of all transaction fees] that are going to be distributed to veCRV holders going live soon.
Having said that, inflation is a nightmare for any asset. However, optimism did rise as more CRV are being locked up.