Is It Worth Investing In Curve?

Last Updated February 4th 2022

15 Min Read

Although the idea of decentralization in the blockchain industry was not initially incorporated into exchanges that traded cryptos, there has been a growing number of decentralized exchanges (DEX) that have opened up to the crypto community.

And while the most popular crypto exchanges are centralized (Think Binance, Coinbase, eToro), DEX platforms are also steadily creeping into the crypto market and becoming the epicenter of the fast-growing DeFi ecosystem.

The latest addition to this ensemble of DEX platforms is Curve, an Automated Market Maker protocol that allows investors to efficiently trade stablecoins. Having been launched only in 2020, Curve is the new kid in town and hasn't quite figured out its path.

According to Curve's official website, the project is meant to make it possible for investors to avoid more volatile crypto assets while still earning high-interest rates from lending protocols.

But is it worth investing in Curve?

In this guide, we will be looking at what exactly Curve is, how it works, its price history, future predictions and whether it will make a good addition to your portfolio.

Contents:

What Is Curve?
What Exactly Is the Curve DAO Token (CRV)?
How Does Curve Work?
Curve DAO Token (CRV) Price History
Curve DAO Token (CRV) Price Prediction In 2022 - 2023
How To Invest In the Curve DAO Token (CRV)
Is Curve A Good Investment?
Conclusion: So, Should I Buy CRV?

What Is Curve?

As stated earlier, Curve is an Automated Market Maker (AMM) protocol. This means that it allows stablecoins to be traded permissionlessly using liquidity pools instead of directly between buyers and sellers.

Stablecoins are cryptocurrencies that are pegged to an underlying asset. This means that they are less volatile with fewer investment risks compared to mainstream cryptocurrencies like Bitcoin.

By focusing only on stablecoins, Curve can guarantee that there is no speculation or volatility in the value of the traded coins. This means that investors are protected from some of the major risks associated with cryptocurrencies.

According to the CEO of Curve Finance, Michael Egorov, Curve's model protects investors from speculation and volatility while pushing stability and composability. Composability simply means that you can use your investment on Curve to earn rewards on another DeFi platform, such as Compound or Uniswap.

In August 2020, Curve launched a DAO (Decentralized Autonomous Organization) to help manage changes to its network. This DAO is now controlled by CRV, a governance token that allows its holders to vote for changes in the Curve protocol.

What Exactly Is the Curve DAO Token (CRV)?

CRV is an Ethereum-based ERC-20 token and the native cryptocurrency of Curve. As stated earlier, it allows its holders to vote on changes that will be implemented into the Curve network.

Curve also uses CRV tokens to pay for commissions when trading pairs on the platform. As a result, traders who hold these tokens tend to have lower fees than those who do not.

You can either buy CRV or earn it through yield farming. This is where you earn CRV tokens by depositing your assets into the Curve liquidity pool. Yield farming is a way for traders to earn an income from their crypto assets without having to actively change the state of the market.

If you have a certain number of CRV tokens, you can vote on changes to the protocol. These can include such updates as:

Creation of new liquidity pools
Changing fees
Changing how fees are distributed
Adjusting yield farming rewards

In order to be a voter, you'll need to lock up your CRV tokens in the liquidity pool. People who have locked their tokens for the longest time have more voting power.

Don't Miss: Will Curve Make Me Rich In 10 Years?

Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

How Does Curve Work?

Curve is a decentralized exchange that uses an automated market maker to maintain liquidity.

So, to understand how Curve works, you'll first need to understand how automated market makers work.

In an automated market maker, the buying and selling of assets is automatic. This means that a buyer and a seller doesn't have to directly interact (like in a traditional order book) in order to transact. Instead, the trading process is done through a liquidity pool.

The liquidity pool is made of several stablecoins that are provided by users who are then incentivized for their deposits.

At its core, Curve uses a mathematical concept known as a bonding curve which ensures that Stablecoins trade at the best possible price. This means that the liquidity pool is constantly working to allow users to make a profit by buying low and selling high.

For instance, let's say you wanted to exchange a stablecoin like DAI for USDC, here is what will happen on Curve:

Your buy signal will trigger more DAI to be added to the liquidity pool
This causes the pool to have more DAI than USDC, which means it is unbalanced
To restore balance, the pool will be forced to sell DAI at a discount compared to USDC
The original DAI/USDC ratio is restored, and everything goes back to normal

However, since Curve's liquidity pool is made up of only stablecoins, the level of volatility is very low compared to AMM liquidity pools that have all types of cryptocurrencies.

So, by working with only stablecoins and a few pools, Curve is able to minimize what is known as impermanent loss. This is a situation where a liquidity provider may take a loss due to high volatility in the liquidity pool.

Curve DAO Token (CRV) Price History

CRV has been in the market for barely a year which means there’s not a lot of historical data under its price. Despite this, the coin has created plenty of buzz in the crypto industry, making it one of the biggest players in the DeFi ecosystem.

And while CRV has a low market cap of around $1.7 billion, it still experiences sizeable volatility making its price history quite a bumpy ride.

One of the most interesting things about CRV’s history is its ridiculously high launch price. In fact, the coin’s current all-time high price of $60.50 is also its launch price. That means that Curve had a pretty hard crash in its first few days of trading.

There are a number of reasons why the price of CRV went bananas when the coin was launched. The most notable seems to be that everyone was trying to get a hand on it. There were a lot of mysteries surrounding the coin’s launch. According to a tweet by Curve Finance, when the coin was launched, an anonymous account spent more around $8,000 to deploy all of the smart contracts operating Curve.

This led to a moment of confusion as users had to wait for more than two hours as the team was afraid that something fraudulent was going on. However, they later confirmed that the smart contract keys were legit, and the token was officially declared to be live.

The first few days were pretty hectic, with the coin being listed on major exchanges like Binance and Polobiex within 5 minutes of launch.

This caused the price of CRV to skyrocket, going as high as $60 per token the first day with a fully diluted market cap of roughly $182 billion. Obviously, this was too much madness for an infant coin like CRV.

In a matter of days, the price began a neck-breaking plummet that saw it bottom out at around $6.9 the next day. Four days later (on 18th August 2020), CRV was down to $3.6 and then $2.69 on August 23rd, 2020.

The price had a slight pump and reached $5.35 at the start of September before spiralling again to as low as $0.3 in late October 2020.

Since then, there has been a lot of fluctuations, but CRV has been unable to reach $5 again. It also has not gone below $1 since mid-January 2021.

The ERC-20 governance and utility token is currently trading at around $3.23, giving Curve a market valuation of $1.4 billion and a fully diluted market cap of $10.6 billion. CRV is currently ranked as the 66th biggest cryptocurrency with a market dominance of around 0.08%.

Curve DAO Token (CRV) Price Prediction In 2022 - 2023

CRV just started trading the other day, and although it suffered a devastating crash in the first few days, it has already made some decent strides. While we can’t say exactly what the future has for it, we are going to take a stab at predicting how it might perform in the next one or two years.

Looking back at CRV’s historical data, we can see that it is one of the most volatile assets. That makes it even harder to predict its future. Despite this, several experts have made their predictions on how CRV will perform in 2022 and 2023.

Wallet Investor is pretty conservative with its predictions. The site believes that CRV will reach $5.5 by mid-2022, rise to $6 in July and end the year with a trading price of $8.06.

In 2023, Wallet Investor predicts that CRV will start the year at $7.84 and slowly grow through the months. The rally to $9 will be mucky, and it won’t be until late March that CRV achieves this milestone, and then jump to $10 by the end of May.

In June, the token will trade more consistently above $10.5 with only a few days below that point. This will be the case until late December 2023, when CRV finally crosses $13.46 per coin.

Digital Coin Price’s predictions are less optimistic than those of Wallet Investor. The price analyst predicts that CRV will close 2022 at $4.64 and 2023 at $5.14.

On the other hand, Priceprediction.net is a tad conservative about CRV’s performance in 2022 but fairly bullish in 2023. The site predicts that Curve’s DAO token will be trading at around $6.27 by the end of 2022 and close 2023 at roughly $9.38.

As you can see from these predictions, CRV’s price might be on the rise. However, we can’t say exactly how far it will go by the end of 2022 and 2023. So, while you can use these predictions as a guide, you shouldn’t put all your hopes on them.

Read Also: Curve Price Predictions

Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

How To Invest In the Curve DAO Token (CRV)

If you are ready to start investing in the Curve CRV, there are three common methods you can use. These care:

Trading
HODLing
Yield Farming

Method 1: Trading

Trading is a simple but risky way to invest in CRV tokens. You simply buy the tokens at a low price, wait for them to go up, then sell them when you see your desired return.

The problem is that cryptocurrency prices are extremely volatile, and this strategy does not always work out immediately. As such, trading requires patience and adherence to strict risk management.

Although CRV is the backbone of a platform for stablecoins, it is itself not a stablecoin. In fact, according to historical price data on CoinMarketCap, CRV is one of the most volatile digital assets. This makes it both a profitable and risky candidate for trading.

Profitable because volatility means that large price swings will occur on a regular basis which results in bigger gains if you time the market correctly. Risky because you could be betting on the wrong side of these swings, leading to heavy losses throughout your trading career.

There are several exchanges where you can trade CRV either against other cryptocurrencies, stablecoins or fiat currency pairs. These include:

Binance
OKEx
Huobi Global
Kraken
Coinbase
eToro

We recommend eToro if you are looking for the most satisfying trading experience. This is because they have a dedicated CRV market where you will be able to trade the token with several different cryptocurrencies, fiat currency pairs and stablecoins.

To start trading CRV on eToro:

Log into your eToro account or signup if you haven't already
Deposit a minimum of $200 into your trading account
Use the search bar on the top of the platform to search for CRV, then click on the appropriate search result
Once you are on the CRV token page, click on "Trade'
Enter the amount you want to use to buy CRV
Click on 'Open Trade'

As an option, you can also set other trading parameters such as stop-loss, which is a sell order designed to limit potential losses by selling your token as soon as the price falls below a certain point and take-profit, which is a buy order used to exit a trade after making a certain profit.

If you do not set either of these, you will have to watch your token until it reaches its desired price, then exit manually. You can also use leverage trading on eToro. This magnifies your trades by allowing you to use borrowed funds to trade more than you would be able to if you had only your funds in your wallet.

The problem with leverage is that it increases both your potential profits and losses. This means that not only do you have to ensure your market analysis is correct more often, but you have to be extra cautious about the level of risk you are willing to take on.

Method 2: HODLing

HODLing is a less risky way to invest in CRV tokens. It does not require you to make any trades, but your returns will still be affected by volatility in prices and slow price appreciation.

In layman's language, HODLing or holding is simply holding onto your tokens in the hope that they will appreciate. Unlike trading that could be done daily or weekly, holding is a long-term strategy suited for non-active investors who think in terms of years or decades.

The best way to hold on to CRV is by using a hardware wallet (also called a cold wallet). These are physical devices that store your private keys offline and away from the reach of hackers. Hardware wallets also offer other security features such as two-factor authentication or multi-signature transactions, which makes them suitable for holding large amounts of cryptocurrency.

So, all you have to do is buy your CRV tokens then transfer them to an off-exchange cold wallet.

According to the Curver Finance website, CRV currently supports wallets by:

MetaMask
Trezor
Ledger
OPera
WalletConnect
Fortmatic
Coinbase Wallet
Authereum
Torus and many more.

Since it is an ERC-20 token, you can use other ERC-20 compatible wallets such as MyEtherWallet.

Keep in mind that although holding is less risky than trading, huge profits are not guaranteed even after many years. This is because there is the possibility that the price might stagnate, fluctuate on the red end of the price charts or drop over the years.

So, the best way to make a profit is to do a combination of trading and holding. This way, you hold some of your tokens then use another portion to trade.

Method 3: Yield Farming

According to Yahoo! Finance, yield farming on Curve is steadily revolutionizing the DeFi industry. This means that it has become a popular way of earning interest on your investment by providing liquidity.

But what exactly is yield farming, and how does it work?

Yield farming is a strategy employed by decentralized exchanges (DEXs) to increase their volume and liquidity so that they can compete with centralized platforms such as Binance and Coinbase.

The idea behind the yield farming system is simple: if you provide enough liquidity, you get paid interest in return.

The amount you earn in interest will vary depending on how many tokens you stake and for how long.

How to Participate in Yield Farming on Curve

To do yield farming, first, you will need a wallet like Metamask. Make sure the wallet has some ETH which you will use for gas fees.

When everything is set, just follow the steps below to start the process:

Head over to Curve.fi
Click on 'Pools' on the upper navigation bar
Connect your wallet. To do this, simply click on 'Deposit', then connect your Metatask wallet and enter the number of coins you want to deposit.
Click on the 'Deposit' button
A confirmation window will pop up. Just click on 'Confirm' to approve the transaction
Another window asking you to allow Curve to execute the liquidity smart contract will open. Click on 'Confirm’ again
Check your wallet to see if the LP coins have reflected. To do this, go to Metamask (or whatever wallet you're using), click on 'Add Token’ at the bottom then paste the smart contract address
Click on 'Next', and the tokens should reflect in your wallet
Next, you will need to stake your tokens in one of the liquidity pools in order to earn higher APY.
Head over to https://dao.curve.fi, connect your wallet, choose one of the liquidity gauges, then click on 'Deposit & Stake'
Approve the transaction by clicking on 'Confirm'
To see your gauge allocation, just head over to https://dao.curve.fi/minter/gauges, then scroll down to your liquidity gauge.

That's it! You are now a yield farmer on Curve.

Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

Is Curve A Good Investment?

As mentioned earlier, it is important to diversify your portfolio. While high-risk investments are generally associated with huge profit margins, they can also be very unpredictable. Since the Curve coin is new and not many people have tried it yet, there are no clear indicators that its price will skyrocket or slump.

Another thing to consider here is security. Although the decentralized exchange seems safe, your funds could still be vulnerable to theft if you are not careful with how you store your CRV.

So unless you don't mind losing money on speculative investments, it may be advisable to just put your cryptocurrency funding in low-risk holdings.

Otherwise, whether you are going to trade or HODL the Curve CRV, we also recommend trying yield farming. According to reports, this strategy has proven highly profitable due to the decent Annual percentage yield. And on top of that, it only requires you to stake your coins for a short time before you can start earning.

So if you are not in any hurry and are thinking of investing in cryptocurrencies, Curve could be the perfect gateway.

Having said that, don't forget that the sole decision to invest falls on you. Do your own due diligence and know if this startup is really worth sinking your cash.

Check Out: What Might Happen If You Invest $100 In Curve (CRV) Today?

Conclusion: So, Should I Buy CRV?

If you are looking for high-risk, high-reward investments like Bitcoin and Ether, this might not be it. But if you want to diversify your portfolio due to recent market uncertainties, Curve could be a good bet. Just keep in mind that this investment comes with its own risks, so always do your research before investing.