A newly passed governance proposal on Curve Finance established a rule by which 50% of all protocol fees go to veCRV holders. According to the original proposal, Curve plans to distribute $2.63 million in the next seven days.
Famous DeFi developer Andre Cronje subsequently called the event a ‘monumental milestone’ for Curve Finance.
Introduced for the first time on November 20, a Curve Finance user served a new governance proposal to the community.
The user proposed to distribute a portion of the ‘admin fees’ to veCRV holders, noting that the protocol accrued $2.63 million in the last 62 days. Once the vote passes, Curve would have to distribute the assets in the next seven days.
Despite effectively airdropping the protocol’s funds, the vote has still passed. Ending on November 27, the governance proposal reached a quorum of 49.75% and passed with an approval rate of 100%.
Based on the results, we can see that only one user voted against the proposal with only 0.18 veCRV.
Right after the vote ended, the team announced that proposal CIP#14 officially passed and that it has been applied. The team also noted that it will distribute all fees in three days. Just as with the vote itself, a majority of the community congratulated Curve Finance on making progress.
Following the initial payout, Curve will continue to distribute the assets to governance token holders on a weekly basis. As a reminder, the protocol’s governance model forces CRV holders to stake their tokens in order to have voting rights.
For the last three months, veCRV holders earned half of the 0.04% trading fees. The other half naturally went to the liquidity providers that power the protocol.
Will the governance proposal improve the value of Curve Finance?
With even higher rewards now, we may see a surge of demand for the native CRV token. Since participating in governance practically rewards the community with weekly rewards, Curve now offers a unique new way to gain passive income.
Since the proposal passed, CRV jumped more than 8.1% in value. According to data from CoinGecko, the token is valued at $0.6 at the time of writing.
Like most altcoins, CRV also suffered from the recent loss in market value that cryptocurrencies experienced. However, the token’s drop began much sooner than the mini market crash on November 25.
On November 20, CRV hit a monthly high at $0.92. This marks the highest value the token had ever since the start of October. Even before that moment, investors valued Curve’s native token at a much higher price.
On September 1, a single token cost $5.44. But on the launch, CRV began with its highest price and ATH at $15.
When looking at high timeframes, we can conclude that the token is not doing that well. We saw a rally that began earlier this month but all bullish plans ended two weeks ago.
With the new governance proposal passing, will we see a surge in interest and altogether a price surge? While Curve Finance may not be as popular as it was before, the governance proposal may light a fire that will spread to the rest of the market.