Trading volumes associated with CRV, the governance token of Curve, a decentralized stablecoin exchange (DEX), have plummeted by a staggering 97% in just two months following a devastating hack in late July 2023. This decline in CRV’s trading activity signifies a significant shift in investor sentiment and has raised concerns about the security of decentralized exchanges.
According to data from Kaiko, CRV’s trading volume on centralized exchanges, notably Binance, where the token is actively traded, has nosedived from nearly $300 million in late July to a mere $7 million as of September 12. This drastic reduction in trading activity reflects a waning interest in CRV and a cautious approach adopted by investors in the wake of the hack.
While CRV is available for trading on various centralized and decentralized exchanges, the lion’s share of trading has historically occurred on Binance, constituting approximately 20% of all CRV trading. Bitbox follows closely with a market dominance of around 7%.
In the world of cryptocurrencies, a sharp drop in trading volume often indicates a loss of interest in the digital asset or a prudent approach by investors who opt for stability and safety. Some investors may adopt a wait-and-see strategy to assess how the token responds to changing market conditions.
Additionally, DeFiLlama reports that Curve’s total value locked (TVL) has fallen from approximately $3.25 billion to $2.17 billion since the hack. This decline in TVL and trading volumes aligns with a broader slowdown in the decentralized finance (DeFi) sector.
The impact of the July exploit, where malicious actors drained over $50 million worth of assets from Curve’s stablecoin pools using older versions of Vyper, a programming language for Ethereum smart contracts, has been profound. The attack raised concerns about the security of automated pools and led to a sharp drop in CRV’s value from $0.74 to $0.40, hitting a new low for 2023.
During this tumultuous period, Curve’s CEO, Michael Egorov, was forced to sell his CRV holdings, which he had used as collateral for loans on Aave and Frax Finance, through over-the-counter (OTC) transactions with entities and individuals, including Justin Sun, as CRV prices plummeted.
In conclusion, CRV’s drastic drop in trading volume and valuation is a clear consequence of the July hack, highlighting the challenges faced by DeFi platforms in maintaining security and investor trust. The road to recovery for Curve and CRV will depend on their ability to restore confidence in their platform’s safety and resilience in the face of such vulnerabilities.
