Thread by @crypto_klay

1/ A thread on: "Curve Wars, the history, the impact, and potential connection to #Fantom Defi"

I’ll outline:

- @CurveFinance background
- How @ConvexFinance has changed DeFi 2.0
- What it may mean for @Spirit_Swap, @LiquidDriver (and others) moving forward...

2/ FYI:
This will be a 2-part series with mention of @CurveFinance, @ConvexFinance, @iearnfinance @Spirit_Swap and @LiquidDriver...

Part 2 coming soon:
@Spirit_Swap boosted farms, weighted gauges and the Spirit Wars potential…

3/ We begin with where all good stories do - the beginning.

Summer of 2020 saw the rise of DeFi 1.0, the explosion DEX's (decentralized exchanges) and the maturation of a space where liquidity provisioning became incentivized by juicy APR.

4/ @CurveFinance was created during this maturation and grew to become predominant stablecoin Automated Market Maker (AMM) of the #Ethereum ecosystem (and 6 others).

With TVL of a mere $46MM in July 2020, that figure is now $23.5BB according to @DefiLlama. Damn!

5/ @CurveFinance aimed to let users and other decentralized protocols exchange stablecoins (EX. DAI to USDC) with low fees and low slippage. Their peg could be better maintained…1 DAI = 1 USDC continually

Seems to be working well based on TVL growth, yeah?

6/ @CurveFinance pioneered Intelligent token utilities…

Creating $CRV (a native token) provided when you deposit funds as liquidity provider. A platform with a $23.5BB TVL = massive weekly fee distribution and huge incentives for liquidity providers and token lockers (veCRV)

7/ $veCRV (vote-escrowed CRV) is an important part of the story. When you lock CRV for a specified amount of time (max of 4 years) you get $veCRV - the governance token used to vote on all Curve proposals and gauges

Think $inSPIRIT by @Spirit_Swap for the #Fantom folks...

8/ $CRV lockers, turned veCRV holders, earn 50% of all trading fees earned by @CurveFinance. Similarly, If you hold $inSPIRIT you earn $SPIRIT from protocol fees collected through swaps.

You'll note many project similarities throughout…

9/ Finally, $veCRV votes influence the pools on Curve, adding new, changing existing, or directing the GAUGES for yield and pools emissions.

Voting is every 10 days.

The influence and importance of $veCRV votes cannot be overstated. Neither can the importance of GAUGES!

10/ Why do gauges matter?

Because those weights decide where the $CRV inflation goes, it allows $veCRV holders to control liquidity direction. It's a powerful tool for token holders, including, now, protocols and begins what is being termed the “Curve Wars”.

11/ Ultimately, 90%+ of all $CRV supply is locked in this flywheel of locking/voting/fee incentives.

So, how do protocols and DAOs attempt to influence liquidity toward chosen pools and gauges?

BRIBES. Bribe $veCRV holders to vote for specific gauges benefiting the protocol

12/ But why bribe?

Because @CurveFinance pools also emit $CRV tokens for LPs. The amount of $CRV received (the inflation) by a given pool (the gauge) is based on the gauge weight, which is a function of how much $veCRV has voted for that gauge.

Confusing innit? Hang in there!

13/ Back in August 20, 2021 this came full circle when @AndreCronjeTech released the medium article “Bribing veCRV gauges 101”…if you know anything about Andre’s connection to #Fantom this is an interesting foreshadow…

andrecronje.medium.com/bribing-vecrv-…

14/ So, what does this all have to do with @Spirit_Swap, @LiquidDriver and #Fantom? Well, gauge control is a massive deal and it’s now come to #Fantom on @Spiritswap.

Think #Fantom Defi 2.0...

Before we go there, we have to talk @ConvexFinance for a bit...

15/ @CurveFinance is liquidity king, but @ConvexFinance has become the Kingmaker. Why?

Influence…voting influence.

Using generous rewards, Convex incentivizes $CRV holders to convert $CRV to $cvxCRV and stake on Convex Finance.

16/ Doing so gives @ConvexFinance control over the voting power of the converted $CRV, and the influence that comes with it.

Similarly, connect $linSPIRIT from @LiquidDriver for the Fantom folks…

17/ @ConvexFinance incentives $cvxCRV stakers with generous rewards (currently 58% APR) paid out in $CRV, $CVX and $3CRV. Pretty damn good...

By doing so, they now own your veCRV voting rights. Growing their sphere of influence…

18/ Convex has been so successful with their mission that @iearnfinance actually gave up 23MM $veCRV votes in partnership w/ Convex.

An alliance was formed to further influence the yields in a symbiotic manner (as it stands today)

Rising tides lift all boats.

19/ First mover advantage + partnerships + their reward incentive structure has enabled @ConvexFinance to own 51% of all $veCRV in the market.

Interestingly…and along the same lines, look at what @LiquidDriver has been doing quietly all year 🤔

https://twitter.com/LiquidDriver/status/1475449113093328902

20/ With 51% ownership of $veCRV, what do you think comes next? Thats right, MORE bribes.

Vote locking $CVX (16 weeks + 2 days) allows the holder to partake in the juicy bi-weekly bribes in Votium.app. $20MM total rewards this week BTW 😱

https://twitter.com/votiumprotocol/status/1475802877004292105?s=10

21/ There are some striking @ConvexFinance like similarities when you start digging around @LiquidDriver’s apparent plans for the future…

$xLQDR might ring a bell to #Fantom familiars…expansion to be continued in the next thread

Potentially involving...

22/ The success @ConvexFinance has had in influencing CRV gauges has kick-started phase 2 of the Curve Wars. Beyond bribes, deep pocketed protocols are now acquiring and locking $CVX en masse.

Owning CVX now serves as the means to the end for governance acquisition + liquidity

23/ How much demand is there for the $CVX token by the aforementioned parties you ask?

Well, 160 days ago it was $2.19 per token, at the time of writing this it’s $45.35 That’s a 20.7X in just over 5 months.

We missed that one, huh anon? Bet we won’t miss the next!

24/ Now with a token in such high demand and prices continually rising - what are protocols doing to amass $CVX?

There seem to be 3 main strategies thus far detailed below...

25/ Strategy 1 & 2 are:

- Placing massive market buys with protocol treasury funds / Examples @Wonderlandfi, @OlympusDao and many others

- Issuing Bonds for CVX / Example: @Olympus DAO

https://twitter.com/Wonderland_fi/status/1470396770823856147

26/ And the 3rd is:

- Passing community governance IPs to specifically approve CVX acquisition - Example KeeperDao’s KIP to acquire $40MM of CVX

Please note: all of these behaviors can be (and likely will be) replicated on Fantom…

https://twitter.com/Keeper_DAO/status/1451381993476743172

27/ The evolution has been truly amazing. Having watched much of this unfold over the last 6 months, at the time not fully understanding the end game…

I can’t help but look at the maturing #Fantom ecosystem and be excited about the future

28/ 8 days ago @Spirit_Swap announced " $inSPIRIT holders will now have the ability to vote for the weight of emissions allocated to these pools via our traditional $inSPIRIT voting page - supporting their “Boosted Farms.” Sound familiar?

spiritswap.medium.com/boosted-farms-…

29/ @LiquidDriver has been making moves for months, including incentivizing $SPIRIT token holders to convert tokens to $linSPIRIT - Sound familiar yet?

The maturation of Fantom Defi is evolving in front of our eyes. This time we’ll be ready and educated…

Fool me once…

30/ Clearly, there are a ton of reasons to be paying close attention to @LiquidDriver and @Spirit_Swap . I'm personally insanely bullish on both - NFA.

If even half of this plays out in the #Fantom ecosystem we are in for a WILD ride…

More project specific details to come!

31/ In the next thread:
@Spirit_Swap boosted farms, weighted gauges and the Spirit Wars potential…


We’ll dive into recent protocol announcements, staking reward specifics, potential partnerships, potential pitfalls and more…

War on #Fantom Community! CC @FTMAlerts