Over the past two weeks the entire DeFi sector has been in a strong uptrend and many of the top market cap tokens rallied by double and triple-digits.
Curve DAO’s governance token CRV has been a standout performer, coming off a low at $0.54 on Jan. 11 to a 2021 high at $1.78 on Jan. 17.
Three reasons for this latest surge in volume and price for CRV are a new collaboration with the Yearn.finance (YFI) ecosystem, positive regulatory developments in the U.S. and an increase in engagement boosting the total value locked on the platform.
The noticeable uptick in trading volume for CRV began on Jan. 14 after Yearn.finance creator, Andre Cronje, tweeted a gif that read:
“Curve.fi presents, in collaboration with Yearn.Finance, permissionless pool creation. Stablecoin pools in 3 clicks. Crv.finance.”
Similar to the days when any partnership or integration announcement from Chainlink (LINK) would provide an immediate boost in volume and price, collaborations with YFI have tended to casue sharp breakouts in DeFi token prices. Take for example, Cream Finance and SushiSwap, which both rallied by more than 100% after Yearn.finance partnership announcements.
CRV’s trading volume increased from $59 million to $350 million following the Cronje’s tweet and a follow-up tweet on Jan. 15 provided an update on the progress of the collaboration stating, “crv.finance updated; Permissionless pool creation added, anyone can create a curve pool that can swap to DAI, USDC, or USDT.”
This pushed the 24-hour trading volume as high as $478 million and boosted the price to $1.23.
Crypto friendly regulation creates opportunity for Curve
A second reason CRV has more than tripled since the beginning of 2021 relates to the recent stablecoin announcement from the United States Office of the Comptroller of the Currency.
According to the OCC, banks will be able to "use new technologies, including INVNs and related stablecoins, to perform bank-permissible functions, such as payment activities." Banks will soon be able to utilize various blockchain platforms to conduct stablecoin transactions as well as provide custody services for those assets, and this means a trusted stablecoin ecosystem and oracle provider is needed.
The Curve DAO platform is one of the larger decentralized exchanges for stablecoins that uses an automated market maker (AMM) to manage liquidity so as this shift occurs, more people may look to the platform as the preferred option.
Increasing user activity and total value locked boost fundamentals
A key factor in the success of any cryptocurrency project is the engagement of its community. For CRV, this is represented by metrics such as total value locked (TVL) on the platform and the volume of transactions per day.
Data from defipulse shows that the TVL on Curve received a noticeable increase since Jan. 4 after remaining relatively flat throughout December.
Curve.finance has also seen a steady increase in the total volume per day transacted on the platform as shown in the following chart from Dune analytics.
Another positive development for Curve was the Jan.17 announcement that “cross-asset swaps via Synthetix.io are now live.”This kicked off another wave of high volume trading volume and hours after the announcement CRV hit its 2021 high at $1.78.
As the total value locked on Curve reaches new highs and daily volume soars, future collaborations such as these are likely to be met with similar enthusiasm.
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