By Alicia Maher
A few hours after the curve DAO team proposed to remove support for terra’s UST, the value of its native token dipped by 20%. It hit $0.9, its lowest price in nearly one and a half years. But it has recovered slightly and now trades at $1.12, according to the latest Coinmarketcap data.
The decline in the CRV price happened a few hours after the curve team proposed to remove support for the maintenance of liquidity pools that contains terra’s UST. The Curve team made the proposal following the de-pegging and the consequent crash of the UST algorithmic stablecoin. The Curve community unanimously accepted the proposal because the UST’s de-pegging can cause Curve’s other liquidity pools to become unstable.
Curve’s Proposal Is Heavily Criticized On Social Media
Even though the proposal to remove liquidity support for UST will positively affect Curve, Twitter crypto has criticized the curve community. They alleged that this isn’t the time Curve should remove their support. Instead, it is a period they need to show some serious concern for UST holders.
Nevertheless, Curve isn’t backing down on its proposed move. The platform’s official Twitter account confirmed the proposal will still go ahead “whether one-weight votes or not.”
A proposal to stop all emissions to UST-related gauges (regardless on whether one weight-votes or not).
Good bye UST – it was a good experiment, but it didn't work out: UST supply grew much larger than Luna liquidity which can absorb redemptions.https://t.co/eSQPnf4rTh
— Curve Finance (@CurveFinance) May 19, 2022
Some industry analysts predict that the dump may have been caused by some of the Curve community members who were opposed to the overwhelming decision of the community. The analysts based their prediction on the fact that the market has been steady since the beginning of the week and the CRV price was too sudden to be associated with any other reason.
The selling pressure has also negatively affected Curve’s TVL. Data from the on-chain analytics platform, Defi Llama, shows that Curve’s TVL has dipped by 9% in the last 24 hours and is now at $9.435. Curve is regarded as the biggest DeFi exchange for stablecoin transactions.
It facilitates large volume stablecoin transactions by maintaining huge liquidity pools. Curve maintains these liquidity pools with large volume stablecoin deposits, with Curve offering yields on those deposits.
Curve Gained From UST Crash
Even though Curve still has UST exposure, it was one of the biggest gainers from the UST crash. Curve’s “3pool” is DeFi’s biggest liquidity pool. Terra founder, Do Kwon, planned to maintain a ‘4pool’ before the UST crash scattered his plans.
Twitter crypto enthusiast with username, Dynamo_Patrick, remarked that Curve’s revenue rose by 625% during the week that UST lost its USD peg. The huge gains were from holders’ attempts at selling their UST tokens.
$CRV was the most obvious beneficiary, its revenue skyrocketing 625% week over week. This was one of the best weeks ever for Curve and underscored both its resilience and its importance to the DeFi ecosystem. 10/X pic.twitter.com/usjXsn3EId
— Patrick | Dynamo DeFi (@Dynamo_Patrick) May 13, 2022
However, the platform’s TVL still dropped significantly after the crash because of Curve’s huge exposure to UST. Curve’s proposal to remove support for UST is one of the consequences of the terra blockchain crash.
Other notable consequences are the summoning of terra founder, Do Kwon, by South Korea’s leading party and the legal action taken against him by some aggrieved South Korea-based UST holders.