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The token I choose for 2022 is ). The doubt was excruciating because I believe that the other big trend will be that of Atom (Cosmos) but I had already done an article on Atom about 1 week ago. The other doubt was with Luna and Fantom. I am super bullish on the Terra blockchain but I have also dedicated several articles to this crypto in the past. I liked Fantom instead for the ecosystem that Daniele Sesta wanted to build with Wonderland, Abracadabra, Popsicle Finance and Sushiswap. However, in the last few weeks, the Wonderland platform has almost collapsed and it is sailing in dire straits.
This trend that takes the name of "Curve Wars" is quite underground but is destined to dominate the DeFi of the future. Curve Finance is an AMM with very low fees and slippage. It was originally created only for stablecoins, then it has also expanded to volatile assets.
What is the problem they are trying to solve? Historically, Yield Farming (Liquidity Mining) platforms have "mercenary" liquidity. Basically, users move to where there are higher returns. The tokens of the farming platforms have a high selling pressure ("farm & dump"). What are these farm and dump tokens? Tokens such as CRV, Farm, Sunny, VVS, etc.
I add liquidity to a pool, then stake my LP token and farm (for example I get CRV and sell it in stablecoin or increase my LP token).
LIQUIDITY AS A SERVICE
Why is the CRV model revolutionary? Through a staking mechanism, the same protocols are encouraged not to sell CRV. You have to be careful because this is not a simple staking. I staking CRV for a number of years and get the veCRV token. How does veCRV work? It simply provides voting power in Curve Finance's DAO. Through this voting power, I can decide which pools to boost by increasing the rewards.
Let's take an example. Curve Finance hosts the pools of Convex, Yearn Finance, Frax, etc.
These protocols are encouraged to accumulate more and more CRV because thanks to them they can increase the rewards in their own pools. Why are they interested in doing this? If they guarantee greater rewards, they attract more users and therefore more liquidity.
How can they accumulate more CRV? They simply provide greater rewards than CRV itself. The mechanism is simple but brilliant:
-The user deposits liquidity on Curve
-Where do you deposit LP tokens? Obviously where there is the best performance. For example, Yearn Finance accumulates CRV, then is able to give APY greater than Curve itself. Convex is able to further boost its pools because in addition to being a CRV whale, they also give the user their CVX token
-The user is clearly encouraged to deposit LP tokens on Yearn Finance and Convex because these two platforms guarantee him a higher APY. Convex takes the user's CRV and in exchange provides him with a higher return and his CVX token. In a nutshell, I provide liquidity on Curve and LP token I put it on Convex, I get CVX which I can transform into cvxCRV by staking them for an APY of over 50% (it comes from CVX token, CRV token and Curve pool). Meanwhile, I give up my CRV which end up in Convex which increases its voting power (DAO). CVX can also be blocked by obtaining vlCVX (voting power on Curve and not interest). Ultimately the CRV are ported to Convex and converted to cvxCRV (Convex takes your CRV and thus increases its voting power and partly diverts it to whoever has the CVX). "Locked" CVX (vlCRV) have greater voting power than CRV itself (due to an approximately 12x boost compared to veCRV). You look at the difference between these 3 pools (UST / MIM), the yield varies according to how many Crv the protocol has (Convex yield is further increased because they can also give their CVX token. Instead, YFI farming is finished because the maximum supply has been reached):
WHAT DOES THIS MEAN?
This turn that might seem complicated suggests that the trend of 2022 could be these DAO. A protocol makes money if users deposit liquidity. How to have a lot of liquidity? You have to give the highest returns. What does it take to give higher returns? You must have voting power in the DAO of the platform. How do you get voting power in a DAO? You have to accumulate their governance token. What is DeFi's dominant platform? Surely if we watch TVL it is Curve Finance.
PLATFORMS ON ETHEREUM ONLY?
Obviously these "Curve Wars" have already spread elsewhere. On the Ethereum blockchain the protocols that are waging "war" are Yearn Finance, Convex, Frax. Other platforms are adopting this model: Hundred Finance (multichain) but also Saber / Sunny (Solana), BeethovenX / Spirit (Fantom), etc
Where can you buy CRV? You can buy it on . Bityard is an excellent exchange that includes: spot market, futures, copy trade and even Mystery Box to earn free crypto. Obviously before buying any token remember to always do your research (DYOR). This is not financial advice but just my personal vision.
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