Trading volumes associated with CRV, the governance token of Curve, a stablecoin decentralized exchange (DEX), is down 97% barely two months after it was hacked in late July 2023. This significant decline in trading volume has been observed on centralized exchanges, particularly on Binance, where the token is actively traded. According to Kaiko, CRV’s trading volume on Binance fell from nearly $300 million in late July to $7 million as of September 12.
The availability of CRV for trading on multiple centralized and decentralized exchanges, including Binance, Uniswap, and Curve, suggests that traders have various options. However, Binance remains the most popular and liquid exchange for CRV trading, with a share of approximately 20%, followed by Bitbox with a dominance of around 7%.
When the trading volume of a digital asset drops, it usually indicates a decline in interest or cautious behavior among investors. This decrease in volume affects the asset’s liquidity as traders and investors opt out, sometimes even liquidating their holdings in search of stability and refuge. Alternatively, they may adopt a wait-and-see approach to evaluate how the token will perform in response to changing market conditions.
In addition to the decline in trading volumes, Curve has also experienced a significant drop in its total value locked (TVL) from approximately $3.25 billion to $2.17 billion since the protocol was hacked. This decline in TVL and trading volumes reflects the general lull in the decentralized finance (DeFi) space.
The hack in July, where malicious actors exploited various Curve stablecoin pools using older versions of Vyper, resulted in the loss of over $50 million worth of assets. Although Curve was able to recover most of the funds, the incident raised concerns about the overall security of the protocol.
Following the hack, the price of CRV dropped sharply from around $0.74 to $0.48 and has since continued to decline, reaching a new 2023 low of $0.40. Curve’s CEO, Michael Egorov, had to sell his CRV holdings, which he had used to secure his loans on Aave and Frax Finance, when the prices started falling. These CRV holdings were sold over-the-counter (OTC) to entities and individuals such as Justin Sun.
The decline in trading volumes and CRV’s valuation highlights the impact of the July exploit on investor sentiment and the need for enhanced security measures in the DeFi space.
Image source: Canva, chart from TradingView
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