CLever offers the best liquid CVX yield strategy you’ve never heard of. You probably know about CLever’s awesome bribe harvesting and future-yield-claiming powers, which are available to anyone who locks their CVX as collateral. What you might not have realized is that our recent LP deployment has created an incredible, unique new opportunity for earning yields on CVX with no locking required!
After months of reliable beta operations and growing TVL, the past few weeks have seen a flurry of activity for CLever. We have taken two significant steps: the creation and presale of the CLEV token, and the launch and seeding of the clevCVX/CVX liquidity pool. We have been talking for months about how CLever helps CVX lockers to earn more yield. What about farmers who hold CVX but don’t want to lock, though? For them, CLever now offers what we think is the hands-down best liquid CVX farming strategy in DeFi.
The magic for liquid CVX farmers is found in the same place that supports the clevCVX borrowers: the famous clevCVX/CVX pool. By providing CVX liquidity in this pool, and staking those LP tokens with CLever, farmers earn yields in CLEV as well as trading fees from the swappers. But this is no ordinary pegged asset LP farm! Given enough time, the risk of impermanent loss from depeg is basically zero. How? It’s all down to the power and nature of the clevCVX token. Let’s dig in.
clevCVX is not a liquid wrapper! It’s CVX… from the future!
First, a little background on clevCVX. clevCVX is CVX-denominated future CVX yields (phew, that’s a mouthful…) Think of 1 clevCVX as 1 CVX from the future. It’s not yet a real CVX, but sooner or later it will be. This is because every 1 clevCVX token can be exchanged via the Furnace, eventually, for exactly 1 CVX. The amount of time it takes to make this exchange depends on several factors, but as long as there is clevCVX in existence, there must either be locked CVX paying it off, or CVX ready to exchange for it in the Furnace.
This dynamic might take some time to wrap your head around, but once you do it’s clear that clevCVX is not a liquid wrapper for CVX, but something completely different: it’s a bond. Specifically, it’s a zero-coupon bond (face value of 1 CVX) with no specific maturity date. Learn more in an awesome Aladdin boule research meeting by Forgiven.
For those of us that don’t think like financiers, 1 clevCVX represents 1 future CVX, no more and no less. This is important, because it completely changes the nature of the way we discuss the price, and the dreaded “peg.”
Impermanent loss & the peg that’s not a peg
Normally when one crypto asset is meant to track exactly the price of some “other” thing, we refer to the peg as the ratio between the price of the two, with the ideal peg being 1. For example, 1 USD stablecoin is supposed to always be worth $1 USD. If it trades higher or lower than that, it is said to be “off its peg”, and depending on how far off, it might mean real problems.
clevCVX is different; rather than a pegged asset, we now know that we can think of it as a bond. Whatever the current price may be, its eventual value (i.e. its face value) is 1 CVX. For the liquidity farmer this is an important distinction, because it means that, on a long enough time scale, both your CVX and your clevCVX are exactly the same, so there is zero impermanent loss!
Of course, as with any bond market, the price at any given time can be different from the face value, so if you needed to sell when the price was low you could take some loss. But the long-term redeemability of clevCVX for real CVX helps to provide buying pressure to put a floor on how much the price can deviate, which helps make the clevCVX/CVX pool much safer even for LPs who might need to withdraw for any reason. And since it’s fully liquid, withdrawal is always an option.
Why farm clevCVX/CVX?
As we’ve learned, clevCVX is not a liquid wrapper, but rather it is a bond, and so it should be considered completely differently than any other wrapper or CVX-paired LP farm. Impermanent loss is slain by the fact that every clevCVX eventually becomes 1 real CVX, and so the nature of the risk changes completely to one that is only time, and not money.
With typical pegged assets, there is a hot potato game that can, in the worst case, play out in liquidity pools. If confidence in the pegged asset is lost or damaged, then there is a rush for the exits as people scramble to sell the pegged asset for the real one. Many, many crypto investors have been rekt this way; left with a worthless token, or forced to sell at a steep discount. With clevCVX this is much less likely because of the nature of clevCVX and its (eventual) redemption for CVX. And even if you do get left with all the clevCVX? Well, most likely it means that your panicky friends have sold them to you at a steep discount, and now you’ve got a mountain of CVX flowing to you until every clevCVX turns into a real one. Not so bad!
