Host: Alex, Research Partner at Mint Ventures
Guest: Xiao Ming (@haowi.eth), Member of Curve Chinese Community
Introduction
Host:
Hello everyone! Welcome to WEB3 Mint To Be, a podcast initiated by Mint Ventures, where we dive deep into continuous inquiry and thoughtful exploration to clarify facts, uncover realities, and seek consensus in the Web3 world. I’m Alex, Research Partner at Mint Ventures. Today, we’re honored to have Xiao Ming from the Curve Chinese Community join us for this special episode.
Before we begin, let’s start with a brief introduction from Xiao Ming and some essential background for our listeners.
Xiao Ming (haowi):
Hi everyone! I’m Xiao Ming (haowi) from the Curve Chinese Community. This is my second time on Mint Ventures’ podcast. I’ve listened to previous episodes and must say the depth of discussion is impressive.
Host:
Thank you for your kind words! Now, let’s jump into today’s main topics.
Recently, Curve has been making headlines again due to several major events:
- FTX Collapse: A major centralized exchange (CEX) implosion left many investors unable to withdraw funds.
- CRV Short Squeeze: A concentrated short attack on CRV (Curve’s native token) caused its price to plummet briefly before rebounding sharply.
- Aave’s Bad Debt: The CRV short squeeze indirectly caused bad debt on Aave, a leading decentralized lending platform.
- crvUSD Whitepaper Release: Curve unveiled its stablecoin (crvUSD) whitepaper, introducing complex but innovative mechanisms.
Today, we’ll unpack these events and explore Curve’s role in DeFi.
Understanding Curve’s Value and Positioning
Q1: How would you describe Curve’s value and positioning, especially for newcomers to DeFi?
Xiao Ming:
Curve is essentially a trustless liquidity infrastructure for Web3 assets. Unlike Uniswap V2’s uniform pricing curve, Curve V2 employs concentrated liquidity optimized for pegged assets (e.g., stablecoins, staked ETH derivatives). Key innovations:
- V1: Focused on pegged assets (e.g., stablecoin pairs).
- V2: Introduced dynamic price oracles and adjustable liquidity concentration, enabling efficient trading for non-pegged assets (e.g., ETH/CRV).
Think of Curve as a decentralized票据 (note) market—similar to traditional bonds/ABS—where assets trade with minimal slippage.
Host:
To simplify:
- Pegged assets: Tokens with tightly correlated values (e.g., ETH/stETH).
- Concentrated liquidity: Deep liquidity around a price range, reducing slippage.
The CRV Short Squeeze: A Postmortem
Q2: What happened during the CRV short squeeze?
Xiao Ming:
The attack unfolded in stages:
- FUD Campaign: An audit firm (BlockSec) falsely claimed Convex had a critical exploit, sparking panic. CRV dropped ~40%.
- Aggressive Shorting: A large wallet borrowed millions in CRV (via Aave) to short-sell, aiming to liquidate Curve founder Michael Egorov’s collateralized position.
Community Defense:
- Michael topped up collateral using Bitcoin/ETH.
- Curve released the crvUSD whitepaper early as a countermeasure.
- Major players (e.g., @f2pool_cn) withdrew CRV liquidity, causing a supply squeeze.
Outcome:
- CRV rebounded from $0.40 to ~$0.90.
- Aave faced bad debt (~$1.6M) due to insufficient CRV liquidity for buybacks.
Key Takeaway: The attack failed because Curve’s community/infrastructure proved resilient.
crvUSD: A Paradigm Shift in Stablecoin Design
Q3: How does crvUSD differ from existing stablecoins?
Xiao Ming:
Three core innovations:
- Price Oracle: Uses Curve’s internal market data (not Chainlink) for accuracy during volatility.
LLAMMA (Lending-Liquidating AMM Algorithm):
- Automated self-liquidation: Positions gradually convert between collateral/crvUSD within a price band (e.g., ETH at $1,500–$1,800).
- Zero external liquidators—trades on Curve naturally rebalance positions.
Monetary Policy:
- Pegkeeper: Algorithmically adjusts supply (like Frax’s AMO) to maintain $1 peg.
- Revenue streams: Interest fees + arbitrage profits.
Host:
- LLAMMA prevents sudden liquidations (unlike Aave/MakerDAO).
- crvUSD targets Curve-native assets (e.g., LP tokens), not competing with DAI/FRAX directly.
Future Outlook
Q4: When will crvUSD launch?
Xiao Ming:
Code is ready, but timing depends on market conditions (e.g., avoiding high-interest-rate environments). No fixed ETA—just "soon™."
Q5: What’s Curve’s endgame if CRV emissions decline?
Xiao Ming:
veCRV’s role evolves:
- Today: Directs CRV incentives.
- Tomorrow: Governs crvUSD minting rights/Bonding Curves for new assets.
FAQ
Q: Why did Aave suffer bad debt?
A: The short seller exhausted CRV liquidity; Aave couldn’t buy back enough to cover loans.
Q: Is crvUSD competing with DAI?
A: No—it’s optimized for Curve’s票据 market (e.g., LP tokens), complementing broader DeFi.
Q: Will crvUSD have governance tokens?
A: No separate token; veCRV holders govern crvUSD’s parameters.
Final Thoughts
Curve’s latest moves reinforce its role as DeFi’s liquidity backbone. With crvUSD, it’s pioneering safer, more capital-efficient stablecoins—while veCRV’s value proposition grows.
👉 Learn more about Curve’s innovations
Stay tuned for deeper dives into DeFi’s evolving landscape!