Weekly Gauge #1 - Mass Dilution
Your silver has become dross; your fine wine is diluted with water. Your rulers are rebels, friends of thieves. They all love bribes and chasing after rewards. (Isaiah 1:22)
Happy 100 week anniversary to the Curve gauge! At Paladin we’ve been building on Curve for almost a year, resulting in the release of Quest, the best solution to control the gauge. We realized that we had built insights that could provide considerable value to the ecosystem. This weekly newsletter is our way of sharing them to you.
Week 99 Recap: Last week, the Curve team discovered substantial undistributed fees in their contracts, which caused a massive week for admin fees. This gave cvxCRV a huge APY over the week, resulting in a mass relocking. This combined with the Relockening on Convex has created a perfect storm for CVX and its veCRV/vlCVX ratio to surge back to 5.46.
Almost 36m veCRV were locked this week, this represents more than 3.5x the amount of CRV emitted over the same time period. While supporters will rejoice in this news, gauge warriors will also understand that this means current veCRV holders were diluted by 6.35% this week.
Currently, one veCRV vote is allocating 0.0095$ in crv emissions
Looking at voting markets, we observe a huge arbitrage between vlCVX and veCRV incentives. Incentivizing on the veCRV layer yields 50% more emissions as on Convex right now. This is because over 90% of the incentives are currently happening on the vlCVX layer, which is effectively putting significant downward pressure on the incentives of the veCRV layer.
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