August 4, 2021: Convex Takes Shape 🗳️✅

$CVX Votes and $CRV Lobbies

Convex’s August update included several great updates about their progress, along with a first look at details about their upcoming voting mechanisms. For those in the know, this is big!

Why exactly is this the “missing ingredient?” Let’s dive in.

Unlike several tokens whose value is pure hopium, $CRV and $CVX can be valued at least partly based on their functional utility. For instance, $CRV can be locked to earn a portion of trading fees. If the price of $CRV token ever drops below the value of the trading fees you’d receive, you have something close to an arbitrage opportunity.

Additionally, veCRV can be used to maximize rewards if you stake other assets, presenting more opportunities for free money. It’s a very useful token, hence why I identify as a Curve maximalist. It should come as no surprise that $CRV can maintain a floor despite the intense downward pressure caused by turbo-dumping.

Another giant chunk of veCRV’s utility comes from its voting rights. The ever fluctuating rewards issued to various Curve pools comes directly as a result of weekly votes. Any group with an interest in driving rewards to a particular pool could do so quite transparently by buying sufficient veCRV and voting accordingly. This reduces to a simple math problem, ie X veCRV => Y rewards, if Y > X then free money.

Convex fits into these tokenomics like stacking pressed spoons. For one example, if you find veCRV to be too illiquid, you can convert it to cvxCRV, which generally trades 1:1 with CRV. Staking cvxCRV at Convex earns a mix of CRV, 3CRV, and CVX, currently netting about 60% APR. Meanwhile Convex takes your CRV and locks it for themselves, meaning Convex gets to sit atop a large mountain of veCRV.

Much of Convex’s value comes from this massive stack. It’s pretty much found ways to maximize its veCRV stash across its platform. For example, they allow users to stake into any Curve pool and leverage this veCRV to boost rewards (minus a fee). For users who have insufficient veCRV, this can mean earning better boosts than one could get directly on Curve.

The “missing piece” of this equation is voting rights. This veCRV is being put to work for all of its value, except for the aforementioned capacity to vote. The value of voting, especially for protocols who have large amounts of capital to throw around, can directly translate into money.

To date, though, this mighty chunk of voting power has simply been left out of the equation. And it certainly is mighty, representing nearly 30% of the total voting power. It’s like if America was holding a presidential election, but California, New York, Texas, and Florida all abstained.

Like Curve, Convex feels the downward pressure of turbo-dumping. While projects valued on hopium get to trade at insane multiples, Curve and Convex are stuck providing significant utility and seeing their price bounce continuously off this floor.

Since Convex price appears to be so sensitive to its floor value, the hope among Convex bulls is that adding voting rights will unlock this final piece of utility. Any entity looking to influence Curve rewards voting would naturally want to purchase voting power where it is cheapest. At present prices, Convex voting rights would be a great bargain. One CVX is worth the equivalent of 4.7 veCRV per one recent calculation:

It had all been a dream until just yesterday. With the August update, Convex announced the mechanisms by which voting would take place.

The locking mechanism is a new feature, designed to “ensure the most committed and engaged users are the ones helping shape the votes.” CVX tokens get locked for 16 weeks, and earn 6% platform fees instead of 5% platform fees. However, users who leave their tokens in an expired lock may see their tokens kicked to a bounty system. Check Convex Discord, Telegram, and Github for more info as the system develops.

Will it affect Convex’s hilarious undervaluation? A $50MM market cap on $4.6B value locked is comically low, but then again, the soup kitchens are probably full of crypto traders who expect rationality from their crypto markets.


While we talk about voting power, we have to talk about Curve and Yearn’s exciting joint effort to build a Legal Activism DAO. Watching the news coming from DC, many are rightly worried about the direction of regulation in the space. DeFi users badly want and need some form of legal activism, and nobody expects the joke that is http://defieducationfund.com/ to protect anything except the salaries and travel expenses of their board members.

The suggested activism DAO aligns with Curve values. It is necessary, and we strongly endorse this proposal.

Loyal readers (THANK YOU!) may note this new entity shares some properties with the PACMAN DAO I impatiently proposed last week. As a Curve maximalist, had I known an officially sanctioned Curve DAO was in the works I likely would have sat on my hands and waited for the big money big brains to do their thing.

That said, the PACMAN DAO has already taken on a life of its own so it can’t really be stopped. I expect PACMAN can exist to work in a complementary or supplementary fashion with this new effort. As the community grows rapidly, I’ll use my ever-dwindling influence within the PACMAN universe to align its efforts with the work of this new organization, in the spirit of how Convex amplifies Curve.

In the interest of keeping this newsletter focused on Curve and related DeFi tanges, I’ll aim to promote both these organizations where they happen to intersect with topics of relevance to readers.

One thing I can say for sure… while other organizations are winning on fundraising, PACMAN DAO to date has churned out the coolest visuals!

Check out more about PACMAN via Telegram and now Discord + Twitter. For the Activism DAO, check the Curve proposal and its Yearn mirror, as well as the related LeXpunK Army.


For more info, check our live market data at https://curvemarketcap.com/ or our subscribe to our daily newsletter at https://curve.substack.com/. Nothing in our newsletter can be construed as financial advice. Author is a $CRV maximalist, and therefore also a $CVX maxi.