Huobi x CRV AMA Recap
Huobi x Curve (CRV) AMA was a great success!
To thank the Curve community for participating in the Huobi x CRV AMA — Huobi wants you to have a special treat of a welcome bonus to Huobi.com.
🔹Now in the first section, we had an introduction of Michael Egorov and Curve (CRV):
Michael is the founder of Curve. Right now he lives in Switzerland. He lived in Russia before finishing his undergraduate studies, then did a Ph.D. in Physics in Australia, then went to the USA where he started NuCypher, and after that, he started Curve.
Curve is an automatic market maker and a dex for stablecoins (or similarly priced assets). Curve launched the product in January this year. Over this time they’ve also introduced BTC token pairs, combined market-making with lending on other platforms etc. In August, Curve was decentralized via transitioning to the DAO. Right now, they have a well-functioning governance system that is used to adopt any changes or new features in Curve system, changing parameters etc.
🔹In the second section, our CM asked Michael Egorov some important questions related to the project and its development.
1. Where did you get the inspiration for this unique project idea of CURVE ? And what influence will we have on the crypto industry due to the project?
The project was actually inspired by liquid staking. I thought about staking NuCypher. The idea I had is to have stakedNU/NU automatic market making. At the same time, I’m an active defi user since late 2018. So I did feel a pain of not being able to swap between stablecoins (dai/usdc) effectively. So this lead me to the creation of Curve algorithm and launching it. In fact, for both liquid staking and stablecoin MM, the algorithm is the same. I feel that the progress of AMMs was a little bit stale, stuck with Uniswap model for some time, and after Curve launched, we started seeing a lot more innovations in AMM space.
2. What is the bonding curve? How @CurveFinance is using it for creating deep on-chain liquidity?
First of all, bonding curves are a method to create continuous liquidity. Unlike order books where you have discrete orders, you can “spread” everything in “infinitely thin” orders. This is done by specifying an invariant like F(balance1, balance2, balance3, …) = const. If you have only 2 coins, this equation describes a curve which is a bonding curve. And when more than 2 — that’s a hypersurface. That curve describes how liquidity is spread across prices. So before Curve there was Uniswap algo, which spreaded liquidity across all prices from 0 to infinity. So if ETH moons 10x, ETH/USDC uniswap pool will still function ok. This universality comes at a price of efficiency. For stablecoin/stablecoin pairs, you can rarely expect coin pricing to deviate more than by 1–2%. So we concentrate most of liquidity within those 1–2% price fluctuations, thereby raising the efficiency by 100x.
3. Staking seem to be popular right now on many blockchain project. Can you please explain the detail about CRV staking plan and the benefits of adding “staking”?
For Curve, this is not quite “staking”. The original purpose is governance b/c only “vote-locked” tokens have a vote. But who will just lock their tokens to vote? So voters should get some economic incentive to do so. And this is where CRV comes. It allows (soon!) for them to receive admin fees generated in the platform. As well as boost their “mining” of CRV when providing liquidity.
4. What is the purposes of CRV and veCRV on Curve Finance platform?
So as I said, the main purpose of CRV is governance. To get governance power, one vote-locks CRV to have “voting escrow CRV” or veCRV. veCRV are not transferrable. The idea is that you get votes not just according to your tokens, but also time commitment. This governance is what’s used to allow for changes in pool parameters, introducing new pools… and even introducing the fee distribution. Coincidentally, admin fees which veCRV vote on get distributed to holders of veCRV.
5. What are the requirements for submitting a proposal?
There should be a minimum of 2000 veCRV for an _actionable_ proposal. However anyone can produce a signaling poll (not necessarily resulting to changes). One should also follow a template for proposal submission ideally, to clearly explain what that is and why, supplied with governance discussion when necessary.
6. We all know that there are many problems with the Ethereum network: scalability issues, high gas costs, slow speeds, etc. So, why did you choose to build a token on the ERC-20 blockchain ecosystem? Why not build it on some scalable blockchain?
Apparently network effects of blockchains are enormous. For example, Bitcoin is a pet rock compare to Ethereum. But it is more used as a store of value. And network effects are even stronger for Ethereum. Because we need to compose with other protocols. And Curve is used while being composed, too, in arbitrage, which is very very important. So everything is built on Ethereum because everything is built on Ethereum! Hard to break this. Indeed though, scalability is an issue. We explore different chains and L2s (such as recently demonstrated zksync). But yep, that’s where the composibility challenge is! I believe that eventually scaling will happen to some L2 or non-Ethereum L1 while keeping Ethereum. The Very Safe Blockchain where everything eventually settles.
7. How does CRV Finance handle and avoid the security and liquidity risks in the DeFi field, such as contract vulnerabilities, network attacks, over-authorization, and liquidation caused by the black swan incident?
We do have rigurous testing process (in fact, the creator of testing framework brownie works for us!). Also Vyper language, as opposed to solidity, allows to avoid human error much easier because of being much more readable. Though not bullet-proof. Of course we do audits, but they are no guarantee. For example, Harvest had several audits. At the end of the day, it’s our task to ensure safety. There are systematic risks with black swan events for coins. If a coin goes down forever, all the pool is exposed to it. We leave it up to the user how to deal with those events. Whether it’s choice of a pool, or hedging, or distributing risks. For example, a good strategy for those who expect USDT downfall someday is to borrow USDT, deposit it on Curve, so that if USDT fails, there is less to repay, too, so nothing is lost. More about risks can be found here: https://www.curve.fi/risks.
8. You do not think that the DeFi TVL will lead all kinds of attacks on governance?
Not sure if this was exactly what was asked, but governance is indeed a very underestimated attack vector! This is the reason why Curve DAO cannot change code of existing pools or take control over funds. There are still malicious things governance can do theoretically. And such risks become higher when you have less of a value controlling the system. One interesting attack vector is to borrow governance tokens, do a malicious vote, leave and short. In order to prevent that, we have the vote-locking mechanism. Just before you can withdraw tokens from governance, your voting power is zero. So you only have voting power when you have vested interest in the future of the platform.
9. What is the value that the Curve project brings to humanity under the risk of an economic crisis and the influence of Covid-19 pandemic as now? What challenges is Curve team facing?
Very interesting that economic crisis was brought here. I think the root cause for this crisis is not covid. I think, we are near the end of unconstrained capitalism. Current system was based on unconstrained growth, but we’re hitting the limits of planet Earth. So something has to change. And when changes happen, there are the biggest opportunities. All the financial system is ripe for a change. And I think that exactly because we’re near this time, appearance of Curve (and cryptocurrencies!) is very very timely.
🔹In the third section, Michael Egorov answered 4 impromptu questions from the community.
1. Do you have any Coin Burn / BuyBack systems or any Token Burn plans to increase the value of Token & attract Investors to invest?
Buyback-and-burn are actually pretty ineffective. Long-term, fee distribution is better because (hopefully!) can lead to more tokens being acquired and locked to receive fees.
2. Crypto projects were closed in many countries due to improper regulation and licenses. How does your project solve these problems?
It’s actually not more possible to close Curve than to close Bitcoin or Ethereum. We try to keep it this way, having as small control as possible. At the same time, DEXes like Curve are very transparent and absolutely useless for money laundering, so hopefully regulators will understand it.
3. Unfortunately, most crypto projects these days are made by young people who are not ready with any business equipment such as the know how, solid experience, branding, marketing, positioning etc. Hence, business can’t be built on pure luck. Now I want to know how competent Curve Protocol team members are?
I would say that the key for Curve was the efficiency of the algorithm. Another key point is the speed of execution. And I think, although the traditional business efforts are important, speed of execution will be the key in coming years.
4. Vast majority of Crypto projects are built just for the sole purpose of amassing wealth for themselves. So, I want to know the value you aim to add to crypto industry that will bring greater abundance to the industry?
As I hinted, I am looking at rebuilding the world financial system. I firmly believe that this is what’s happening.
After the AMA, we have received numerous positive feedbacks from the community, which motivates us to deliver more and more wonderful events in the future.
Join our telegram https://t.me/huobiglobalofficial and stay tuned.
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