Curve – the decentralized exchange for stablecoin trading – users will soon be able to accumulate voting power and increase their rewards by 2.5x after an implementation goes live later this month.
Users with over 2,500 in “voting power” will be able to submit their own proposals while those holding lesser will still be able to vote on existing proposals.
Boosting Rewards for Liquidity Providers
After August 28, CRV holders can lock their tokens to accumulate voting power and increase their CRV rewards by up to 2.5x. The move will allow for added governance on the Curve Finance platform, compared to the current method of earning CRV in proportion with the provided liquidity.
Per the proposal, users locking up 1,000 CRV for a year will get a voting power of 250 veCRV. Those locking it up for four years will gain over 1,000 veCRV. All lockup periods are irreversible.
All tokens locked in a so-termed “CRV voting escrow” will gradually accrue voting power in the form of veCRV (short for voting escrow CRV). These tokens can then be used to vote on proposals submitted to the platform’s governance protocol, the Curve DAO.
That’s not all. User’s will also be given a “boost multiplier” that will increase alongside their voting power, even as a direct relationship between does not exist. Instead, factors like the user’s ratio of voting power to the total voting power of a pool will govern this value.
For the uninitiated, Curve is a decentralized, UniSwap-like exchange for stablecoins. By focusing on stablecoins, it’s able to offer traders extremely low slippage, and liquidity providers enjoy little-to-no impermanent loss, noted Coin Monks.
As press time, Curve supports DAI, USDC, USDT, TUSD, BUSD, and sUSD, as well as BTC pairs, and it lets you trade between these pairs extremely quickly and efficiently. When stablecoins or stable assets are involved, Curve’s prices are usually the best in the business.
Curve Risks and a DeFi Carnage
For speculators and Curve fanatics, the question of locking up these tokens while ensuring they maintain value/give returns arises. Lockups – irreversible as they would be – will prevent anyone from “cashing out” or accessing funds before time.
That means for users holding on to CRV – which fell from $13 at launched to about $5.23 at press time – becomes a losing bet if it continues to fall and selling action remains high. There’s the added risk of strict regulatory action in the DeFi space, or perhaps, even the broader world economy seeing a financial turmoil and funds flowing out of the cryptocurrency space (like it did this March).
But apart from those risks: Curve believers might see better control over the protocol and the added benefits from vote locking. This resonates with the long-term vision of Curve Finance, to shift from a centrally governed operation to wholly in the hands of shareholders in the future.