Key Takeaways

A recent Convex Finance token unlock has sent a bullish impulse through the Curve Finance token ecosystem.
The CVX and CRV tokens have both surged more than 50% since the unlock began.
Convex has also seen an uptick in the amount of CRV tokens staked in its protocol.

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Users relocking their CVX tokens and depositing more CRV tokens into Convex Finance has contributed to CVX’s recent run. 

Convex Breaks Downtrend

Convex Finance looks like it’s bouncing back. 

The DeFi protocol, designed to help optimize yields from the Curve Finance exchange, has seen its CVX token soar over 57% after more than 27.4 million tokens were unlocked at the end of June.

Despite the expectation that a large number of CVX tokens entering the market would push prices down, the unlock has instead acted as a bullish catalyst for the protocol. Now that the unlock has passed, it appears users are more willing to deposit their tokens into Convex without the fear that the token release could cause prices to fall. 

Since the unlock began on Jun. 30, CVX has rallied 57.5%, providing relief from Convex’s months-long downward trend. In April, CVX topped $38; three months later, the token had fallen over 90%. 

CVX/USD chart (Source: CoinMarketCap)

According to Dune Analytics data compiled by user 0xroll, around 42% of all CVX tokens from the recent unlock have been relocked in the protocol so far. The remaining tokens have either been withdrawn or are waiting for their owners to decide whether to relock them. 

Although CVX tokens are unlocked weekly, the amounts are usually so small they are unlikely to affect prices. The next major Convex token release is scheduled to take place on Oct. 27, when another 21.7 million tokens are scheduled to unlock. 

Curve Receives Boost

Curve’s yield-bearing CRV token also appears to have benefitted from the Convex unlock. After sweeping a low of $0.64 on Jun. 30, CRV has soared 53%, currently trading at $0.98. 

CRV/USD chart (Source: CoinMarketCap)

Curve liquidity providers earn CRV tokens as rewards. By locking CRV tokens, owners gain the ability to vote on which liquidity pools gain boosted CRV rewards.

Instead of individual CRV tokens holders managing which pools to vote for every 10 days, Convex helps users optimize yields by allowing them to stake their CRV tokens into its protocol in exchange for cvxCRV. Convex rewards its CRV stakers by giving them a claim to CRV rewards from Curve, a slice of Convex platform earnings, CVX tokens, and bribes given to veCRV holders.

Since the Convex token unlock, the protocol has seen a marked uptick in the amount of CRV tokens staked for cvxCRV. Dune Analytics data compiled by Yearndeveloper banteg shows the amount of veCRV held by Convex has increased by over 30 million since Jun. 30. 

veCRV held by DAOs (Source: Dune Analytics/banteg)

Convex’s official Twitter account has also noted the boost in Curve deposits. On Jul. 2, Convex announced that the rate of locked CRV over the previous 24 hours came in at 1,491% of daily CRV emissions. After the recent influx of CRV deposits, Convex now holds over 48% of all CRV tokens in existence. 

As holders lock up their CRV and CVX tokens in Convex’s contracts, selling pressure typically decreases. This can cause the tokens to increase in value as buyers outpace sellers on exchanges. 

Although the CVX unlock has acted as a bullish catalyst for the Curve token ecosystem, the longer-term outlook remains unclear. Macroeconomic headwinds and fears of an imminent recession have weighed heavily on crypto assets in recent months and currently show no signs of clearing. Both Convex and Curve still have a long road ahead before they can reclaim their all-time highs. 

Disclosure: At the time of writing this piece, the author owned CRV, CVX, and several other cryptocurrencies. 

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