Is Curve DAO Token a Good Investment?

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Contributor, Benzinga
November 2, 2021

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Curve DAO

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Decentralized exchanges (DEXes) are the lifeblood of the burgeoning decentralized finance ecosystem (DeFi). They offer the best way to swap between cryptocurrencies without having to go through a financial intermediary. DEXes also provide a great way to earn passive income on your cryptos. The incentives built into the best of these platforms benefit everyone who uses them. 

Curve Finance, the largest DEX on Ethereum, utilizes an innovative incentive structure built around the Curve DAO Token (CRV) to drive adoption. The Curve platform is an important pillar in DeFi and will likely continue to grow as Ethereum attracts more and more users. 

But is Curve DAO Token a good investment? Learn more now.

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What is Curve DAO Token?

Curve DAO Token is an ERC-20 token on Ethereum and is the governance token of the Curve Finance platform. Anyone who holds Curve tokens can vote on both major and minor changes to the protocol. All you need to do is lock your CRV in the Curve Locker, and you will be awarded votes proportional to how much you staked and for how long. 

The Curve Finance application has 2 major use cases for its users: staking and swapping cryptocurrencies. It offers about 42 different basic pools with tokens like USDT, DAI, USDC, ETH, WBTC, LINK, MIM and more. 

You can also create what Curve calls a  “Factory Pool” with multiple stablecoins pegged to the same asset (like USD, Ethereum, etc.). Users can either stake their cryptos in these pools to earn Curve tokens or swap between the tokens. The platform has some of the lowest fees on Ethereum and the smallest price variations between stablecoins. 

Curve functions as the foundation of a massive ecosystem of yield farming protocols designed to earn you high yield on your tokens safely. Many platforms have multiple liquidity pools built around unique Curve liquidity provider tokens (LPs), the cryptos you get back when staking on Curve (similar to a receipt). With these special pools, you can earn interest both on Curve and these secondary platforms at the same time. 

Staking through multiple decentralized applications can be risky, especially when the code hasn’t been fully audited. For example, if you stake USDT in the Curve 3Crv pool and deposit that token into Yearn finance, you could lose all your funds if either platform is hacked or if the code fails. Overcollateralization of your cryptos can be extremely risky, just like with traditional assets. 

Curve Price History

Even though the Curve protocol has more than billions of dollars worth of cryptocurrencies locked in it, the Curve DAO token is not a huge altcoin. It still has a market capitalization approaching $500 million, placing it just within the top 100 cryptocurrencies by market cap. Generally, lower market cap tokens like Curve can experience greater price swings with the same amount of buying pressure as larger ones. 

In its first days of existence in August 2020, CRV traded at ridiculously high prices but it crashed down to earth in a matter of days. Since then, it has mostly followed Ethereum. In early May, around the same time Ethereum reached its previous all-time high, Curve spiked to about $4.30. Soon after, most of the market crashed, including Curve. 

The token has only recently risen above the levels seen in May. It has been especially volatile in the second half of October, like most of the market, and may skyrocket again if the right conditions are met. 

Curve Competition

Curve is the reigning king of DEXs on Ethereum with billions of dollars of total value locked (TVL). It's the backbone of many DeFi protocols, and it's regarded as the best place to provide liquidity and trade stablecoins. While not direct competition, Uniswap, Sushiswap, and Matcha are other DEXs on Ethereum that serve similar purposes.

Curve’s specialty is liquidity pools with stablecoins (cryptos pegged to the value of another asset, often USD), but they also have pools with large tokens like Wrapped Bitcoin and Ethereum. Curve is also tightly integrated with a few useful DeFi platforms that can earn users extra yield on their cryptos.

Curve’s focus on stablecoins meshed well with another member of the DeFi old guard, Yearn Finance, in the early days. Now yield optimization platforms including Yearn Finance, Convex Finance, Pickle Finance and more all offer pools where you can stake your Curve liquidity provider tokens. 

Some applications have similar pools with Uniswap or Sushiswap integration, but they seem to be getting rarer. No matter whether Uniswap or Sushiswap wins out in the long term, there will likely be plenty of room for Curve to thrive. 

How to Buy Curve

Curve is a popular altcoin listed on many of the top cryptocurrency exchanges, so it's quite simple to purchase. Some of the best trading platforms that offer Curve trading are Coinbase and Gemini. 

After you set up an account with one of these platforms you will need to verify your identity. Generally, this entails providing your address, Social Security number and a picture of a valid ID (like a driver’s license). Once your identity is verified you can deposit fiat currency or another supported cryptocurrency and purchase some Curve DAO tokens.

  • Coinbase
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    Sum of median estimated savings and rewards earned, per user in 2021 across multiple Coinbase programs (excluding sweepstakes). This amount includes fee waivers from Coinbase One (excluding the subscription cost), rewards from Coinbase Card, and staking rewards. ³Crypto rewards is an optional Coinbase offer. Upon purchase of USDC, you will be automatically opted in to rewards. If you’d like to opt out or learn more about rewards, you can click here. The rewards rate is subject to change and can vary by region. Customers will be able to see the latest applicable rates directly within their accounts.

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Best Hardware Wallet For Curve

Worrying about losing your Curve DAO tokens and other cryptocurrencies to cyberattacks? Ledger may be your key to peace of mind. Hardware wallets store your private keys offline, allowing for better security of your digital assets.

Best Hardware Wallet: Ledger

Ledger has been the most popular hardware wallet brand for many years for good reason. It offers 2 fantastic models of wallets: the Ledger Nano S and Ledger Nano X. The Nano S is the simpler model, perfect for anyone looking for a well-priced and incredibly secure wallet. The Nano X employs a larger screen and Bluetooth functionality for easy, on-the-go use. 

Both models have the same certified secure chip that randomly generates, encrypts and stores your wallet’s private key. No one can access your wallet without that key and it never leaves the device. Ledger wallets support more than 1,000 different cryptocurrencies on multiple blockchains such as Ethereum, Bitcoin, Dogecoin, Ripple and all ERC-20s (including Curve).

BZ

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The Curve DAO Token’s success will likely heavily hinge on the Curve Finance platform’s ability to stay the top decentralized exchange.

Cryptocurrency Market Outlook

The cryptocurrency market has been in a bear market after several crypto exchanges and lending platforms collapsed in 2022. However, the start of 2023 showed some recovery with a resurgence in both Bitcoin and altcoins. That being said, there's a good chance we don't see another bull market until the Bitcoin halving in 2024.

Is Curve a Good Investment?

Curve could be a great investment, especially if you think that a low market capitalization to TVL ratio is important. However, Curve is still a volatile altcoin and will likely see dramatic price swings. It will likely follow Ethereum and Bitcoin to some degree so keep an eye on where they move in the future. 

If you believe that DeFi as a whole will thrive on Ethereum in the future, Curve is likely a strong bet. 

Disclosure: ²Sum of median estimated savings and rewards earned, per user in 2021 across multiple Coinbase programs (excluding sweepstakes). This amount includes fee waivers from Coinbase One (excluding the subscription cost), rewards from Coinbase Card, and staking rewards. ³Crypto rewards is an optional Coinbase offer. Upon purchase of USDC, you will be automatically opted in to rewards. If you’d like to opt out or learn more about rewards, you can click here. The rewards rate is subject to change and can vary by region. Customers will be able to see the latest applicable rates directly within their accounts

Frequently Asked Questions

Q

Hows Curve different than Uniswap?

A

Curve has 3-pools that allow lenders to provide liquidity with 3 assets, whereas all of Uniswap’s pools hold 2 assets. Curve is regarded as the best DEX for stablecoin trading.

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About Henry Stater

Henry is an expert in all things crypto. He stays up to date with all the latest coins, platforms and technologies in the field. He has particular expertise in the burgeoning decentralized finance ecosystem and loves trying out all the new platforms. He also always follows major events in other financial markets and geopolitics as a whole, especially when an event’s effects ripple through the crypto market.