Curve Finance Inflation Drops 67% As Earnings Outpace Issuance

Curve Finance, the second largest decentralized exchange (DEX) by TVL, said it’s cutting annual token inflation for a fifth year.

CRV token inflation is set to drop to 6% from 20%, starting this year.

The token’s yearly emission rate has been dropping by 16% per year, according to an announcement shared with The Defiant. When launched in 2020, issuance was 274 million tokens, while in 2024 it stands at 137 million.

CRV spiked 5% today to $0.30. In anticipation of today’s drop in emissions, the token appreciated during the past week, up 35%. Yearly price action hasn’t been as positive, with CRV marking a 40% loss, and a whopping 98% drop since its debut in August 2020.

Members of the Curve ecosystem are celebrating a step toward sustainability. Alongside the drop in emissions, the project’s DAO reported that earnings have outpaced issuance. Earnings are entirely allocated to their governance token (veCRV),.

CRV holders have more reasons to celebrate. According to Dune, users continue to lock CRV in record numbers, with a new all-time high of 881 million CRV, or $264 million, deposited and locked in the protocol for the long haul.

“All this data serves to highlight the ongoing maturation and stabilization of Curve Finance’s tokenomics, ensuring its viability for years to come,” according to the emailed statement.

End of Vesting

Curve Finance is also touting the end of its vesting period.

“The first positive part of this event is that much less tokens are coming into circulation,” Michael Egorov, founder of Curve Finance, told The Defiant. “A widely cited concern is that this could reduce my interest in continuing to develop Curve. However, I’ve locked a significant amount of CRV tokens as veCRV, which I cannot unlock. Despite this, I can still earn protocol fees, so my incentive to keep developing the platform remains plenty strong.”

Since Curve’s launch, the project has been incrementally unlocking CRV tokens, with the longest vesting period set to conclude today. Notably, the end to the longest vesting window did not coincide with a large sell-off from its holders, which points to a long-term commitment from early adopters.

That sentiment coincides with previous claims from Egorov.

In early July, users started locking CRV tokens in record numbers, reaching a rate of lockup 100 times greater than previous periods. This meant, according to Egorov, a potential renewed intensity in protocols bidding to exert more influence over Curve.

He added that the data also hinted at investors increasingly focusing on the importance of governance and fee distribution, something that could prove to be a “tectonic shift” in users’ overall attitude in an ecosystem overly focused on financial gains, Egorov said.

Market Fades Curve

Celebrations aside, not all is rosy at Curve.

According to DefiLlama, total value locked for Curve Finance has been plummeting. Though it sits at $1.85 billion for its DEX, which lands it in second place only behind Uniswap with $4.5 billion, it’s been on a hefty decline since its Jan. 5 peak of $23 billion. Meanwhile, Uniswap TVL is also down from its $9.9 billion peak in May 2021.

The token’s market capitalization has had a similar fate. CRV’s market capitalization is down to $367 million from $2.5 billion in 2021.

With the drop in emissions, the increase in earnings, and the record interest from users to lock in CRV tokens, the team hopes the combination of the three will buck the project’s trend.