August 18, 2022: Terrible Twos βοΈπ
What to expect from Curve's recent inflation reduction
Curve turning two is a big deal. Emissions tapering off by ~15% for just the second time in Curve history.
If you query the .rate()
function on the Curve contract, youβll now get a value of 6161965695807970181, whereas last week the number was 7327853447857530670. To be precise, this is a 15.91035847462854% reduction. Why such an unusual number?
It is derived from the formula 2 ** (1/4).
This specifically has the property of turning into 50% over exactly four years. We can observe this benchmark to the nearest Wei in the recent rate cut:
In other words, every four years, the emissions rate of $CRV is cut exactly in half. Does this remind you of anything? Itβs explicitly designed to be a smoother version of Bitcoinβs clunky emissions reduction schedule.
In other words, the Curve schedule will play out very similarly to Bitcoin. But thanks to this smoother formula it will end up being emitted for over 350 years, although practically speaking it will dry up much faster.
This great thread spells it all out:
Another good thread:
What does this mean practically? Weβre not generally fans of price analysis (nor is this financial advice), but letβs look briefly at Bitcoin to draw parallels.