Curve DAO is a living, constantly evolving organism of the financial world. Like any complex system, it has its own indicators of health and activity. One such indicator is the peg chart of liquid locker tokens to the base CRV token.
For those who want to know the basics and get to the heart of the matter, I recommend reading the following material about liquid lockers:
Some Curve DAO participants start their morning by monitoring the crvhub.com/wrappers page, which displays in real-time:
The amount of veCRV in various DAO lockers
The balance of token liquidity pools
Token peg values during exchanges
Trading activity in pools
By clicking the icon in the upper right corner, you can plot a graph showing the peg value of different locker tokens:
Throughout 2024, the token peg value fluctuated within the range of 80-100%. However, recently this indicator has changed significantly, dropping to 50-70%.
Main depeg factors:
CRV price increase: The token's value increase triggered holders' desire to lock in profits by selling liquid locker tokens.
Forced loan repayments: Some sales were involuntary. Participants who borrowed CRV on lending platforms were forced to return tokens due to liquidation risks amid price increases.
Hedge position closures: one of the profitable farming strategies could have been buying liquid locker tokens, placing them in Curve pools with 30-40% yield, and shorting futures for a delta-neutral position. When CRV rises faster than liquid lockers, this strategy starts generating losses.
Liquid locker tokens demonstrate their primary function — providing real liquidity.
The price is formed by the liquidity pool balance at the time of sale.
Liquidity will be additionally incentivized by wrapper DAOs to create buyer interest (more on this in the article continuation).
Unlike liquid locker holders, veCRV owners cannot extract short-term profit from volatility.
Experienced Curve DAO participants viewed the depeg as an arbitrage opportunity — exchanging CRV for locker tokens with a premium.
Important to note: liquidity support mechanisms from Convex, StakeDAO, and Yearn continue to function, providing a stabilizing effect.
Let's recall the basic rule: 1 CRV locked for 4 years equals 1 veCRV.
Key question for forward-thinking individuals: How many liquid locker tokens can be purchased now for 1 CRV?
Summary: The current "depeg" should be viewed as a discount that owners, either by choice or necessity, are willing to pay for liquidity.
The continuation of this article will be interesting for those who want to better understand the mechanisms affecting the peg of liquid lockers.
Read next, the second part
Depegged 2: Strike back or who will save liquid staked CRV LST prices
Author: Y K from Curve Rus chat. Edited by hell0men. Date 08.12.2024
User docs and FAQ: https://resources.curve.finance/
Tech docs: https://docs.curve.finance/
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