Analyzing the “Real Secret” behind Curve’s Success – Tokens + Governance

Curve's Success: The Real Secret - Tokens and Governance

KOL Foxi.eth believes that the “real secret” behind Curve’s success is its token and governance. The article analyzes Curve governance, Convex governance, DAO politics, liquidity markets, bribery, and cross-chain governance.

Curve Governance: The aim is to enable the community to collectively make decisions about the Curve protocol in a transparent process. It is an important part of driving veTokenomics and reducing token selling pressure. Proposal types: 1) Ownership type (51% support / 30% required quorum): Example – Add ETH/stETH to the gauge controller; 2) Parameter type (60% support / 15% required quorum): Example – Adjust parameters in the swap curve based on market conditions. Main components: Curve DAO governance includes a governance forum (off-chain) and a DAO dashboard (on-chain). Even if a proposal fails initially, it often gets approved upon resubmission with different execution times after enactment.

Convex Governance: CRV holders delegate their voting power to vlCVX holders to earn higher APY on Convex. Convex currently owns about 54% of veCRV, and proposals from Frax, Curve, and Covnex will be displayed on the Convex snapshot. Voting lockup = veCRV system: Incentivizes CVX holders to lock their tokens; idle CVX has a kickback (not for governance). Authorization: Transfer your voting power to the Convex team (deployer address), to Votium (briber). Proportional voting: If 60% of vlCVX votes in favor and 40% votes against, Convex will submit a 60% in favor and 40% against on-chain vote, preventing a winner-takes-all outcome.

DAO Politics: From the effective voting breakdown of @CurveCap, we see that two addresses together have enough power to pass the required quorum alone and are likely to pass Curve proposals. Voting details: Since veCRV holders’ participation is not 100%, Convex’s share ends up being >50%. When Convex does not vote (unable to reach the vote count), it is difficult for DAO proposals to reach the required quorum. Quorum Wars: How to pass a proposal’s required quorum when Convex does not vote? Ownership 30%: Yearns + other whales need to vote, Parameter 15%: Whales can pass it on their own.