DamoTalks episode 1|Exclusive Interview with Curve Founder: Can CRV “survive” the worst DeFi coin in 2020?
DamoTalks episode 1
Guest: Michael Egorov, founder of the Curve project
Host: Lufei — Co-founder of TokenDamo
Live time: October 10, 2020
CRV made the coin-man Long Xiao Shu lose a lot of money.
CRV is the platform coin of the stablecoin exchange project Curve, which offers low slippage and a low cost stablecoin exchange, with relatively small losses.
When he initially saw CRV, Long Xiaoshu was excited: “The global M1 supply is about $35.2 trillion, if 5% of the global currency is issued and circulated on the blockchain in the future, the future development potential of this project are incalculable. ”
After Curve issued coins, Long Xiaoshu first mined, then felt unhappy with the earnings and directly bought tokens. When the coin price plunged, still keep adding positions to plunge, without fear of DeFi winter. Long Xiaoshu believed that CRV would come back soon.
By October, CRV didn’t come back and became the worst DeFi’s coin in 2020!
A few days ago, according to Twitter coin users, Curve’s drop topped the list of projects, reaching 92.7%. on October 7, it dropped 95%, while Curve’s total market cap was about $45 million. When the coin was first issued, the major exchanges scrambled to get it on the shelves, CRV’s unit price shot up to $30 per coin, and the full circulation market cap reached $90 billion. It can be said that it fell from full blood to silk blood.
Despite the dismal CRV coin price, there are many people who are bullish on it. “The reason is simple, although the current DeFi winter, Curve still got a good growth, in the major DeFi project Curve trading volume of about $150 million per day, ranked second. It shows that there is a market demand for the project itself and it is not all about liquidity mining to stimulate growth.” said Zou Xiaoyang, a long-term coin holder.
In the face of the DeFi industry winter, will CRV rise again or will it fall? Why did Michael create it in the first place? What exactly is its true value capture? In the face of market competition, where exactly is Curve’s moat?
It all has to start at the beginning.
Ten years of reading: from physics to blockchain
Curve project founder named Michael Egorov (hereinafter referred to as “Michael”), and V God is the same Russian.
According to his LinkedIn profile, he has spent 11 years studying since he started university in 2003, all the way to his post-doctorate.
From 2003–2008, the university attended the Moscow Institute of Physics and Technology, specializing in applied mathematics and physics. This school, formerly known as Moscow State University’s Department of Physics and Technology, is known as the “MIT of Russia” and should be considered one of the most powerful science and technology schools in Russia. Michael himself loves physics and won a bronze medal in the International Olympic Physics Competition in 2003.
He went to Swinburne University of Technology in Australia from 2008 to 2011 for his PhD, where he earned a double doctorate in physics and philosophy. This school is supposed to be the leading school in Australia in IT.
From 2011–2014, he went back to Monash University for his postdoctoral studies. During his post-doc, he worked on ultracold atoms. During this period, he also worked as a project engineer for Collage.
In short, his field of study is quite broad, with extensive involvement in computers, physics, philosophy, and mathematics, and he is an uncompromising academic. According to his own words: “He doesn’t have much time for himself (pastime), his hobby is to learn to work.”
Although the fields are different, he feels that essentially they are all related, and he has maintained this love for physics. In an interview with Token Damo, Michael said, “In the case of Curve, the invariants of tokens are sometimes like the Hamiltonian functions in quantum mechanics, not the same thing, but, there’s a similar feel.”
In terms of blockchain project experience, in 2016 Michael co-founded a project called NuCypher as its CTO, specializing in the development of distributed key management systems. The project received multiple rounds of funding, with an ICO private placement in 2018 that raised more than $30 million and another $20 million in private investment in 2019. According to the official announcement, the NuCypher mainnet is scheduled to be released on October 15. coinbase was also planning to consider, earlier, shelving the project’s token NU.
Overall, this is a relatively good quality project, with NuCypher being the first KMS to be implemented using a decentralized solution and having a first-mover advantage in terms of market tracks. Moreover, it is moving forward according to plan as the year moves on.
In January 2020, Michael started the Curve project in Switzerland. When asked why he left NuCyphe, Michael told Token Damo that “I saw an opportunity in stablecoin and knew how to solve it when I would have regretted if I didn’t go for the project, I would have felt it was too late.”
In 2018, he played with some DeFi protocols like MakerDao. in 2019 while using DEX, he didn’t find Uniswap to be that great. This prompted him to develop a new stable coin, DEX, and release a whitepaper in November of that year. According to his calculations, the transaction cost could theoretically be reduced to about 1/100th compared to a typical DEX. with the same volume, Curve was able to provide 100–1000 times more market depth than Uniswap and Balancer.
Three major challenges: team, security, competitors
However, the process of creating the Curve project was not a straightforward one. The first challenge was the lack of people.
From the first month of Curve’s launch to the time when the lock volume reached 10 million, I was the only one busy with the project, doing everything from project code to community maintenance.
In February, the project had some fruitful cooperation with iearn. After more than 10 months of development, the situation has improved. Michael says, “There are now six people on the project, all communicating and collaborating remotely. Everyone has a ‘geek mentality’ and was very motivated to do things before they joined Curve. curve is where everyone’s passion lies.”
The second challenge was security. the Curve project had several audits of the contract, for example, and a report given in January by Trail of Bits, a well-known code audit firm, showed that there were some flaws in the Curve contract code, but that it was not fatally dangerous.
The absence of fatal problems does not mean the project is safe. In fact, Curve has experienced several security storms during its development. For example, before the token went live, someone pre-mined 250,000 CRV tokens.
Most recently, 0x protocol team researchers discovered a vulnerability against the Curve contract that allowed an attacker to extract a large token balance when the contract’s amplification factor A was updated.
In response to the 0x discovery vulnerability, Curve is currently deploying a solution for the old contract pool, while the new contract pool is unaffected by this vulnerability.And, a generous reward … is offered to the discoverer of the vulnerability.
Considering that the project contract was originally developed by one person, it is not difficult to understand the emergence of the relevant vulnerability. The official Curve website also clearly suggests that there are risks associated with participating in the project. Michael admits, “It’s important to keep building the project, rather than spending time arguing about vulnerabilities.”
The third challenge is the fork project’s capture of market space, and in early September, the Curve fork, Swerve, was created from the market, with a more “equitable” allocation of all SWRV tokens to its liquidity providers rather than to the founding team, advisors and venture capitalists. Swerve’s creation is unique because it enables it to legally deploy Curve’s copyrighted contracts.
In response to the emergence of competitors, Michael is clear about where Curve’s moat lies, saying, “It’s important to maintain a competitive team behind the project, which will essentially determine who will be the industry leader, not the code. For example, ethereum and ethereum classic.” In fact, curve has been iterating at a rapid pace since its launch.
Fast iterations: layer2 and DAO
Vitalik, the creator of Ether, has said on Twitter that project parties and users should migrate to a layer 2 network using the Rollup type as soon as possible, and this could be a trend for DeFi in the second half of the year.
On August 17, Charlie from Curve team replied to the message of users in the telegram group, saying that the future (Curve) will use Layer2 solution and expansion, but it is not finished yet. Now, the Curve team is advancing layer2 very fast. Less than two months later, Curve has already started testing Layer2.
According to the announcement from Matter Labs and Curve, with the help of Matter Labs, the Curve team has rewritten the existing Curve contract into a Zinc version based on Zk rollup technology, and has now opened the beta network for testing.
ZK Rollup is a more sophisticated technology, ZK Rollup can almost reach Layer 1 level of security. zK Rollup will solve several basic problems on Optimistic Rollup: eliminating the risk of annoying tails: stealing funds through complex but feasible attack vectors; reducing withdrawal time from 1–2 weeks to minutes. Support for fast transaction confirmation and exit with an unlimited number of withdrawals; introduce privacy by default.
While choosing Optimistic would be simpler, it would sacrifice some security and would not allow for much of a trade-off in terms of security.
As you can see, Curve chose ZK Rollup for the very important reason of its security considerations. The current volume of locked assets on Cuvre exceeds $1.5 billion, and with a recent daily trading volume of about $150 million, it already has a considerable scale.
On the other hand, hidden beneath the volume is the fact that its DAO governance has been effective so far.
First of all, since the opening of DAO voting, 26 project governance proposals have been released, with an average of one proposal from the community every 2 days. The founder of the Aragon project also commented that CurveDAO is a rare and active DeFiDAO.
Secondly, the community currently has a locked position of 16.67% of the CRV in circulation, with an average lock time of 3.23 years. Depending on the lockup volume and lockup time, the lockup holders can receive a 50% transaction fee bonus.
Further, Curve has looked to open 15 coin exchange pools, driven by the community. In particular, the recent metapool solution takes full advantage of the principle of DeFi combinability and enables the centralization of liquidity. Newly added stable coins do not need to open a separate pair of pools, but can be combined by using 3pool liquidity and stacking them like building blocks. According to this model, gusd\husd\usdk\usdn\linkusd\musd and other coin exchange pools have been added consecutively recently.
Conclusion: Becoming a blockchain infrastructure For Curve’s more long-term future planning, Michael actually did not do much work, he focused more on the present. Michael says, “In a way, there wasn’t a lot of preparation for the launch of Curve online. I think the most important thing is to do research, and the Curve algorithm comes from my own research, and we need to keep going deeper to come up with more effective algorithms for different asset classes.
At the same time, business work is also important, and I see that DEX is currently lacking something that large traders need, including Curve as well, which needs constant iteration.” In fact, Curve’s future market prospects don’t need him to worry too much, Curve this model has the potential to become the entire blockchain industry infrastructure, stable coin exchange is just an attempt. In the future, Curve will also support cDAI and other pass-through pledged tokens, allowing those to regain liquidity pledged or locked tokens to trade at a lower cost.
How big will this market be? It’s hard to imagine. will Curve succeed? It’s also hard to imagine. One thing that is conceivable is that this method of trading, built on mathematics, will be successful. TPS: On October 15, Token Damo and AEX Anbank invited Curve founder Michael Egorov to the Chinese community for an AMA to talk about the latest developments and future plans for the Curve project in person. If you want to join the group, you can follow the public number and reply CRV to add the assistant to the group, and there will be mysterious gifts waiting for you.
Token Damo strives to be objective and impartial in the content and opinions contained in this article (report), but does not guarantee its accuracy, completeness, timeliness, etc. The information or opinions expressed in this article (report) do not constitute any investment advice, and Token Damo does not assume any responsibility for any actions taken as a result of using this article, so please be careful when participating in the cryptocurrency market.