After the CRV liquidation, is CVX the top choice for whales to buy the dip?

Author: Luccy, BlockBeats

Last week, DeFi experienced the biggest turning point of this cycle. CRV continued to decline to a low of $0.219, and founder Michael Egorov's lending positions were gradually liquidated. According to Arkham statistics, in less than half a day, all of Michael's loan positions across five protocols were liquidated, amounting to $140 million.

Although the price of CRV has rebounded, the most notable is CVX. On June 17, according to Binance market data, CVX briefly surged to $4.66 before falling back, with a 24-hour increase of over 90%.

Is CVX the Top Choice for Whales to Buy the Dip?

Michael Egorov stated in an interview with CoinDesk that this liquidation was triggered by a vulnerability incident at UwU Lend. However, unlike before, when CRV fell, Michael did not promptly add to his positions but allowed a chain of liquidations to occur. Due to the size of Michael's positions, the market could not handle it, leading to $10 million in bad debts.

To quickly eliminate the adverse effects of accumulated bad debts on the market, on the evening of June 13, Christian, co-founder of the crypto fund NDV and an NFT whale, announced on social media that he acquired 30 million CRV from Michael.

In addition to helping Michael repay his debts, Christian also mentioned that Curve had been under pressure because Michael had obtained liquidity that ordinary project parties could not usually access. Now that the liquidation is complete, it means Michael has finally exhausted the liquidity he held, and Christian believes that "there will be no secondary market selling pressure at least until 2028."

This also means that now is a good time to buy the dip on CRV, and the market performance indeed reflects this. According to data from the Binance platform, when CRV hit the bottom at $0.219, the trading volume of the CRV/USDT spot trading pair reached 463 million within just one hour (with a transaction value of $111.5 million), setting a historical record for this trading pair. At the same time, CRV also ranked among the top in the Smart Money 24-hour inflow list for two consecutive days.

As the largest stablecoin exchange protocol on Ethereum, most DeFi projects rely on Curve, and the Curve protocol remains effective and immutable. Therefore, we have reason to speculate that Michael's liquidation may mark the beginning of a DeFi comeback.

On June 17, Curve Finance officially stated that the funds flowing into veCRV last week were already six times the inflation for that week. These inflows include direct locking and locking through Convex Finance, Stake DAO, and Yearn. This is the highest weekly inflow of CRV locking in recent years.

As one of the three major protocols that initiated the Curve War, Convex Finance's TVL reached $1.316 billion at the time of writing, accounting for more than half of Curve's ($2.285 billion), which also means that Convex's chips are relatively concentrated, and whales are naturally focusing on Convex Finance.

In addition to Christian mentioned earlier, Zoomer Oracle, a member of kennel capital, also clearly stated that he bought CVX at $2.05. Zoomer Oracle believes that CRV/CVX is undervalued, and "Convex is the beta of Curve, with a simple fivefold potential."

Besides CVX, what other targets are there in the Curve ecosystem?

With Michael's loans gone, the market is no longer suffering from post-traumatic stress, and the bad debts have been cleared; DeFi may have welcomed good news.

In addition to various DeFi protocols in the Curve War, such as Stake DAO, Yearn Finance, Olympus, and Frax, which are considered stable protocols, the gameplay of each protocol can be seen in "The Curve War Upgrade CVX Battle, the Exciting Power Struggle Continues." Another application scenario of the Curve protocol is to support stablecoin projects through the Curve 3pool (DAI/USDC/USDT pool).

According to Curve data, the current trading volume and TVL data of the 3pool are less than a million, which means that some more mainstream stablecoins are less likely to use Curve for trading, but the liquidity of the Curve protocol itself can still support small stablecoin projects.

Currently, the modular market is gradually rising, and modularization will lead to an increase in chains. Each chain will need stablecoins to sustain the development of application scenarios. Therefore, Curve 3pool can provide certain liquidity for these stablecoins, especially algorithmic stablecoins. Of course, since Curve 3pool allocates rewards in CRV, this requires CRV itself to have sufficient value.

After the liquidation, Michael stated that this incident might help strengthen Curve's security measures and lending mechanisms, and could create better services for users in the coming months. Whether this can truly allow Curve's flywheel to take off again remains to be seen with time.