January 23, 2024: Enter the Void 🌌🔭

Convergence Finance prepares to launch their meta-governance black hole

crv.mktcap.eth

Jan 23, 2024

It’s about T minus one week until the Convergence Finance launch event. You might want to pay attention as we approach the event horizon…

Convergence self-describes as a “meta-governance black hole” layered atop various DeFi protocols. The concept is to accumulate governance rights, while simultaneously optimizing their underlying yield.

If this mission reminds you of something, it should not be a surprise. Convergence is borrowing from the best of what has worked well in DeFi… gauges, staked asset tokenization and bonding are inspired by Curve, Convex and the late Olympus DAO.

To fulfill this mission, Convergence recently announced they raised a $1.8MM seed round from crypto funds and a variety of notable community members. The announcement dropped amidst a hubbub of excitement in the run-up to their launch.

The first protocol Convergence is targeting for their meta-governance black hole is Stake DAO, which helps to illustrate how the concept will work in practice:

This graph may be indistinguishable from mental illness, but the mechanics will likely be familiar to those familiar with Convex.

Convergence will be introducing a $cvgSDT, which represents a liquid version of veSDT. Convergence mints $cvgSDT by perma-locking $SDT as veSDT and socializing the boost. A forthcoming Curve pool of $SDT-$cvgSDT will provide liquidity at a floating peg. TL/DR: $cvxCRV for SDT 0.00%↑

There are, of course, plenty more subtleties, but we’re cherry picking the mechanics most reminiscent of $cvxCRV to demonstrate that Convergence is leaning into what works. For the full overview of mechanics, we recommend this full writeup by prior guest writer Diligent Deer and researcher asxn_r on behalf of one of the lead investors, Prismatic Capital.

For its part, Stake DAO’s governance has already been preparing for the launch by considering a proposal to whitelist the Convergence multisig for locking.

After Stake DAO, the Convergence formula will be repeated for other protocols… from the Prismatic Capital article, some potential protocols that have been discussed include Curvance, Conic, Tokemak, Concentrator, CLever, and Frax.

All of this activity will converge (“Hey! That’s the name of the protocol!”) into their $CVG governance token. Like several other attempts at veTokenomics, $CVG can be locked for both governance power and yield. However, the Convergence team has some additional tweaks to the classic ve-model.

For starters, locking $CVG is represented as an NFT describing the lock particulars, which can itself be traded. This provides a bit more fungibility for lockers than classic veTokenomics.

Locking also requires specifying a ratio between $ysCVG, which gives access to treasury yields, and $veCVG, which provides voting power and carries the possibility of birbs. The voting power is itself split between decaying $veCVG, which has power over Convergence governance (ie gauge weights) and fixed $mgCVG, which contains the governance power over underlying protocols.

Further reading on each:

Metagovernance: $mgCVG
Yield: $ysCVG
Big Picture: veCVG / $mgCVG / $ysCVG
Docs: $CVG Locking

Next week the launch plan officially rolls out, which includes deployment, seeding a Curve pool, and a token generation event. And, of course, an airdrop, which no doubt is fueling much of the hype:

For those looking to purchase tokens via the Token Generation Event, the team has announced specific numbers:

If it strikes you as a comically low valuation, you might just be a permabull like us. We’ve been permabullish on a variety of crypto tokens all the way to the poorhouse.

Or then again, it might be low because Convergence is actually onto something potentially big. They’ve been steadily building towards this launch since their white paper was published two years ago, which is generations in crypto time.

In this time they’ve not simply been researching, but building up an excited community. Outside of Convergence, they’ve been active around the broader flywheel. They’ve been sighted working with Llamas!

And spotted around Protocol f(x)

Internally, they’ve also spent the past years building community while also showing off their technical chops and shipping bona fides.

They previously launched a soulbound token for community building. While you could still technically mint it, it’s not recommended, as its usefulness has expired:

They also launched a rare cvgPepe collection as Bitcoin ordinals.

These projects were mostly just for fun, but a more recently announced side project called Tangent looks to be more than a simple gimmick. Tangent plans to serve as an onchain spot market built atop Curve, enabling on-chain orders, such as Perpetual Market Orders & Limit Orders, a major request among traders.

Our understanding is that more details about Tangent are likely to be released in the runup to launch, so stay tuned.

If you are interested in learning more about Convergence, you’re in luck. Thanks to a thread000r competition as part of their airdrop plans, there is no shortage of sharp threads on the subject. Here are a few we’ve found, presented in order of where they were randomly slotted into the following list:

Or better yet, check out their docs, pressure then to open a Github, and otherwise find their current links.

Disclaimers! Author has no direct interest in $CVG.

BUT! We’re keenly aware that by also adding our own thred on Convergence, we’re perhaps guilty of adding to the noise, while creating an appearance of airdrop-hunting.

For disclosure, the team approached us last year about adding us to their community booster program. We requested that if we are added to such program that any tokens be sent not to us, but to a cause we support (at present, Leviathan News).

Not that you should consider anybody trustworthy among our bizarre corner of greedy anon degenerates, but for whatever it’s worth we’ll assert that we’re writing about Convergence not because we are pursuing any airdrop, but as always, simply because we consider it newsworthy to our audience.

We’re admittedly imperfect about avoiding conflicts of interest and maintaining any semblance of neutrality. All the same, as our newsletter inches towards 10K subscribers, we want to let new subscribers know that we’ll at least strive to be upfront about our particular grifts.

crv.mktcap.eth

January 23, 2024: Enter the Void 🌌🔭

Convergence Finance prepares to launch their meta-governance black hole

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