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The Curve platform announced that 50% of all the trading fee will be distributed to the holders of veCRV in a move initiated at incentivizing liquidity providers and governance participants.
The stablecoin DEX Curve has initiated a new dividend program for the investors and holders of its new governance token CRV. In its Twitter announcement, Curve mentioned that its veCRV stablecoin gets around $350 million daily trading volumes. At this rate, they predict an annual percentage yield (APY) of 300%.
Admin fee collection for veCRV (locked $CRV) holders starts in 11 hours.
With today's stablecoin trading volume ($350M daily!) this would result into 300% APY for veCRV 😱
— Curve Finance (@CurveFinance) September 19, 2020
Speaking to CoinDesk, Curve founder Michael Egorov said:
“We’ll start moving towards a cashflow-based protocol because the numbers are too sweet to not do it”.
The main goal of the Curve DAO token has been to incentivize liquidity providers on the Curve Financial platform. Besides, its other goal has also been getting more users involved with the governance of its protocol.
But to participate in governance, users first need to stake their CRV to the voting contracts. They can do this by exchanging their CRV for veCRV (voting escrow CRV). Starting yesterday, these escrow tokens will start receiving half of all their staking fees on Curve. The official announcement reads:
“Starting on the 19th of September 2020, 50% of all trading fees will be distributed to veCRV holders. This is the result of a community-lead proposal to align incentives between liquidity providers and governance participants (veCRV holders)”.
Fee Structure on Curve DEX
The trading fee on the Curve DEX platform is currently 0.04% per trade. This fee remains within the pool until the Liquidity Providers (LPs) remove their share. With this fee, the trading fees gets distributed between veCRV holders and the liquidity providers.
Over the last few weeks, the Curve platform has been seeing high trading volumes of $400 million per day. Thus, the fee on the platform has also jumped between $70,000 and $150,000 per day. Currently, the Curve platform distributes 2 million CRV tokens to liquidity providers annually. This amount will also drop by nearly 15% each year.
The sudden surge in Curve volumes was also due to a vampire mining attack by Curve fork Swerve. Explaining it, the Curve founder said:
“The fork attracted non-Curve people in initially, but after their inflation ran out, they switched to Curve increasing the TVL [total value locked].”
As per DeFi Pulse, the Curve platform has a total o $1.18 billion in total crypto assets staked. The Curve token is currently trading at $1.53 with a market cap of around $85 million.
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