Curve Finance, founded by Michael Egorov in 2020, emerged as a significant player in DeFi by offering a unique stablecoin trading model. However, its journey has been filled with challenges and political battles.
The Birth of StableSwap
Michael Egorov stood out among crypto founders due to his physics background. In 2019, he released the StableSwap whitepaper, combining features of constant sum and constant product models, allowing swaps with near-zero slippage. Curve went live on Ethereum in 2020 with its first pool of Compound assets, enabling traders to execute large trades with minimal price impact.
The Rise of a Political Machine
In August 2020, the CRV token launched with a vote-escrow model. Users who locked their CRV received veCRV, giving them governance rights and a share of trading fees. This transformed Curve into a political economy, where weekly 'Gauge' votes decided which pools received CRV incentives, leading to the so-called 'Curve Wars' where projects competed for rewards.
On the Edge of Crisis
In July 2023, Curve faced a significant crisis due to a bug in the code, resulting in losses estimated at over $60 million. Michael Egorov's leverage also put him in a precarious position. However, unconventional measures, including OTC sales of CRV tokens, helped stabilize the situation and avoid systemic collapse.
Despite its challenges, Curve Finance continues to innovate, aiming to maintain its vital role within the DeFi ecosystem. The future may hold new competitors and obstacles, but its impact on the market is already undeniable.
