Throwing a Curveball - The Daily Gwei #51
How the most anticipated DeFi token launch went so wrong it ended up being right (kinda).
Anyone remember YAM? That was so 24 hours ago - now it’s all about CRV - a new token that launched today and managed to achieve a fully diluted market cap of more than $150 billion (yes, that’s right, billion). The craziest thing is that the Curve team themselves didn’t even launch the token - an anonymous “chad DeFi farmer” launched it for them.
Let’s recap what happened. As with many smart contracts in Ethereum, they are developed in the wild on public Github repositories. Naturally, Curve had its token/DAO contracts live on their Github repo which meant that anyone could review the source code. Due to this, the chad DeFi farmer that I mentioned above found out that he could actually deploy the DAO, activate the token and start the yield farming mechanisms all on his own - so that’s what he went ahead and did. After this happened, many people were very confused (even the Curve team were) and they were calling this deployment a scam and warning people against interacting with it. As it turns out though, it was a totally legitimate deployment and around 3-4 hours later the Curve team decided to roll with it.
The community was not okay with this because for several hours early yield farmers were able to accrue a large amount of CRV because they didn’t wait for the “all clear” from the Curve team. This was obviously very risky for these early farmers but you know what they say - the early farmer gets the yield (okay maybe they don’t say that). Anyway, community members thought the fairer approach would of been to just redeploy the whole system and start fresh though this probably would’ve been even more confusing. There’s a timeline of events in this thread if you’d like to dive deeper.
Once Curve decided to roll with it, speculation ran wild that this was in fact a staged event and was done as a legal maneuver to avoid regulatory scrutiny. Basically, the Curve team can now say that their token was launched by a community member instead of themselves so that they can claim “sufficient decentralization” when the regulators come knocking. Though we have prior evidence that this sort of thing doesn’t fly with regulatory bodies like the SEC because the deployers of TheDAO tried to use this exact defence but the SEC’s report on TheDAO stated that this approach doesn’t work to avoid liability.
So that’s just another crazy day in this crazy industry. Personally, I’m totally spent because my brain has been at 100% capacity for the last 3-4 days trying to stay on top of everything. Ethereum is a personal addiction of mine (if you hadn’t noticed) but the last 3-4 days has just been something else entirely. Anyway, I hope all of you reading this get to take a break over the weekend and recharge a bit because I think we’re only getting started and there’s plenty more YAMs and CRVs to come.
Have a great weekend everyone,
All information presented above is for educational purposes only and should not be taken as investment advice.