Curve (CRV) טוקנומיקה

The Curve DAO Token (CRV) is the governance and utility token of the Curve Finance protocol, designed to incentivize liquidity provision and promote active participation in the protocol's decentralized governance. The tokenomics are centered around the "vote-escrowed" model, where locking CRV grants users the non-transferable governance token, veCRV.

Issuance Mechanism

The Curve DAO Token (CRV) is an ERC-20 token launched on Ethereum on August 12, 2020.

• Maximum Supply: The CRV token launched with a maximum token supply of approximately 3.03 billion CRV.
• Minting Control: The minting of additional CRV is controlled by the Curve DAO. This process is managed through the Curve.fi: Gauge Controller smart contract, which is, in turn, controlled by the Curve DAO via the Curve.fi: Voting Ownership smart contract. A successful DAO vote is required to execute contract calls that result in the minting of new CRV.

Allocation Mechanism and Vesting

The initial allocation of the maximum token supply was distributed to various stakeholders, with specific vesting schedules designed to align incentives for long-term commitment.

Note: The remaining supply is allocated to liquidity providers and the community fund, which is distributed via the gauge system.

Locking Mechanism: veCRV (Vote-Escrowed CRV)

The core of CRV's tokenomics is the vote-escrow mechanism, which requires users to lock their CRV tokens to receive the governance token, veCRV.

• Locking Requirement: Only ERC-20 CRV on the Ethereum network can be locked to receive veCRV.
• Lock Duration: Users can lock their CRV for a selectable period, with a minimum lock time of one week and a maximum lock time of four years.
• Voting Weight Calculation: The amount of veCRV received, and thus the user's voting power, is both amount-weighted and time-weighted. The voting weight ($w$) is calculated based on the amount of CRV locked ($a$), the time left to unlock ($t$), and the maximum lock time ($t_{max}$, which is 4 years): $$w = a \frac{t}{t_{max}}$$
• Decaying Weight: The voting weight of veCRV gradually decreases as the lock expiry date approaches.
• Smart Contract Restriction: Generally, the account locking the tokens cannot be a smart contract unless it is whitelisted (e.g., widely used multi-signature wallets).

As of September 29, 2022, Curve DAO demonstrated strong long-term commitment, with 53.8% of its circulating supply locked and an average lock duration of 3.56 years, which was the highest among comparable protocols at that time.

Usage and Incentive Mechanism

The CRV token's primary objectives are to incentivize liquidity providers and encourage active governance participation. The utility of CRV is realized through the veCRV token, which grants three main functions:

1. Governance (Voting)

veCRV holders govern the Curve DAO, which utilizes the Aragon smart contract architecture. Governance concerns include:

• Protocol parameters
• CRV token emissions
• Application and protocol upgrades
• Onboarding new gauges and collateral types (e.g., for the crvUSD stablecoin)

To create an on-chain proposal, a user must hold at least 2,500 veCRV. Proposals require the support of over 51.00% of all votes to pass, with varying quorum requirements:

• Ownership Proposals (controlling most functions and smart contracts) require a quorum of 30.00%.
• Parameter Proposals (controlling liquidity pool parameters) require a quorum of 15.00%.

2. Staking (Fee Accrual)

veCRV holders receive a portion of the protocol fees generated by Curve Finance.

• Fee Distribution: 50.00% of all fees generated from trading, borrowing, and stabilization are distributed to veCRV tokenholders.
• Reward Mechanism: These fees are collected and used to purchase 3CRV (the LP token for the TriPool, consisting of USDC, DAI, and USDT), which is then distributed to veCRV holders.

3. Boosting Liquidity Provider Rewards

veCRV holders who also provide liquidity to Curve pools can significantly increase their CRV rewards.

• Reward Boost: By vote-locking CRV, liquidity providers can earn a boost of up to 2.5 times the base amount of CRV rewards on the liquidity they contribute.
• Liquidity Provision: Any deployment of the CRV token can be used to provide liquidity to Curve pools, earning both trading fees and CRV rewards (claimable weekly).

Unlocking Time

The unlocking time for CRV tokens is determined by the vesting schedules set at the token's launch (August 13, 2020) and the individual lock duration chosen by users who convert CRV to veCRV.

• Initial Vesting:
  • Investors and Employees were subject to a linear two-year vesting schedule starting on August 13, 2020.
  • The Core Team was subject to a linear four-year vesting schedule starting on August 13, 2020.
• veCRV Unlocking: For users who lock CRV for veCRV, the tokens are locked for a period chosen by the user, up to a maximum of four years. The tokens become available for withdrawal only after the selected lock-up period expires.