DeFi Giant’s native token Curve (CRV) plummeted 20% as the platform proposes dropping support for UST on Thursday.
CRV has dropped to $0.9, its lowest level in 16 months. Having rebounded slightly, it is presently trading at $1.10.
The token’s losses occurred shortly after Curve proposed discarding incentives for maintaining Terra’s UST liquidity pools. The proposal comes just two weeks after UST was substantially de-pegged from the dollar following a drastic crash.
Given that UST’s de-pegging threatens to destabilize Curve’s other liquidity pools, the Curve community has largely voted in favor of the proposal.
CRV token declines in value after the proposal
Despite the plan overall being in its favor for Curve, it received some criticism on Twitter. Users said that the platform had abandoned UST holders at a critical time.
Good bye UST – it was a good experiment, but it didn’t work out: UST supply grew much larger than Luna liquidity which can absorb redemptions.Curve Finance on Twitter
Given the CRV’s quick plunge and the fact that markets have been reasonably stable this week, it’s probable that the sell-off was sparked by a small number of traders objecting to the UST exclusion.
The sell-off looks to have affected Curve’s total value locked (TVL). Curve’s TVL has dropped roughly 9% in the last 24 hours, to $9.3 billion, according to data from Defi llama.
Curve is the largest DeFi exchange, catering largely to stablecoin transactions. It achieves it by holding large liquidity pools to help with transactions.
Curve offers interest on stablecoin deposits, which are used to maintain liquidity pools.
Curve profits despite the UST implosion
While the exchange is still vulnerable to UST, it has reaped significant benefits from its downfall. Its “3pool” liquidity pool is now the largest liquidity pool in DeFi. After UST’s implosion hastened Terra founder Do Kwon plans to maintain a “4pool.”
Curve’s revenue increased by 625% during the de-pegging of UST, according to Twitter user @Dynamo Patrick, as traders attempted to sell their UST holdings.
Despite this, the platform’s TVL dropped significantly after the crash due to its UST exposure.